Form 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1994
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from............to.................
Commission file number 1-4482
ARROW ELECTRONICS, INC.
(Exact name of registrant as specified in its charter)
New York 11-1806155
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
25 Hub Drive
Melville, New York 11747
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 391-1300
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange on
Title of Each Class Which Registered
Common Stock, $1 par value New York Stock Exchange
Preferred Share Purchase Rights New York Stock Exchange
5-3/4% Convertible Subordinated
Debentures due 2002 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference
in Part III of this Form 10-K or any amendment to this Form 10-K.
[ X ]
The aggregate market value of voting stock held by nonaffiliates
of the registrant as of March 8, 1995 was $1,888,554,056.
Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of the latest practicable
date.
Common Stock, $1 par value: 46,387,259 shares outstanding at
March 8, 1995.
The following documents are incorporated herein by reference:
1. Proxy Statement filed in connection with Annual Meeting of
Shareholders to be held May 9, 1995 (incorporated in Part III).
<PAGE>
PART I
Item 1. Business.
Arrow Electronics, Inc. (the "company") is the world's largest
distributor of electronic components and computer products to
industrial and commercial customers. As the global electronics
distribution industry's leader in state-of-the-art operating
systems, employee productivity, innovative value-added programs, and
total quality assurance, the company is the distributor of choice
for over 350 suppliers.
The company's global distribution network spans North America,
Europe, and the Asia/Pacific region. The company is the largest
electronics distributor in each of these vital industrialized
regions, serving a diversified base of original equipment
manufacturers (OEMs) and commercial customers worldwide. OEMs
include manufacturers of computer and office products, industrial
equipment (including machine tools, factory automation, and robotic
equipment), telecommunications products, aircraft and aerospace
equipment, and scientific and medical devices. Commercial customers
are mainly value-added resellers (VARs) of computer systems. The
company maintains 160 sales facilities and 15 distribution centers
in 28 countries.
During 1994, the company acquired Gates/FA Distributing, Inc.
and Anthem Electronics, Inc. in transactions accounted for as
poolings of interests and, accordingly, the company's consolidated
financial statements have been restated to include the operations of
Gates and Anthem for all periods presented. In January 1994, the
company acquired an additional 15% interest in Spoerle Electronic,
the largest electronics distributor in Germany, bringing its
holdings to 70%, and increased its holdings in Silverstar Ltd.
S.p.A., the largest distributor in Italy, to a majority share. In
addition, the company acquired Field Oy, the largest distributor of
electronic components in Finland. In February, the company acquired
TH:s Elektronic AB, a prominent distribution group headquartered in
Stockholm. In April, the company acquired Copenhagen-based Exatec
A/S, one of Denmark's largest distributors. In May, the company
acquired Texny Glorytact (HK) Limited, a large semiconductor
specialist in Hong Kong. In October, the company acquired The
Megachip Group, a large distributor of memory and computer products
in France, Germany, and the U.K. In November, the company acquired
Veltek Australia Pty Ltd. and Zatek Australia Pty Ltd., two
Melbourne-based broadline distributors.
In 1993, the company acquired a 15% share in Spoerle
increasing its holdings to a majority interest. The company also
acquired Zeus Components, Inc. a distributor of high-reliability
electronic components and value-added services, Microprocessor &
Memory Distribution Limited, a focused U.K. distributor of high-
technology semiconductor products, and Components Agent Limited, one
of the largest distributors in Hong Kong. In addition, the company
acquired Amitron S.A. and ATD Electronica S.A., distributors serving
the Spanish and Portuguese markets, and CCI Electronique, a
distributor serving the French marketplace.
In North America, the company is organized into five product-
specific sales and marketing groups: The Arrow/Schweber Electronics
Group is the largest dedicated semiconductor distributor in the
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world. Anthem Electronics, Inc. is a leading distributor of
semiconductors and computer products. Zeus Electronics is the only
specialist distributor serving the military and high-reliability
markets. Capstone Electronics focuses exclusively on the
distribution of passive, electromechanical, and interconnect
products. And Gates/Arrow Distributing, Inc. distributes commercial
computer products and systems.
Through its wholly-owned subsidiary, Arrow Electronics
Distribution Group - Europe B. V., Arrow is the largest pan-European
electronics distributor. The company's European strategy stresses
two key elements: strong, locally-managed distributors to satisfy
widely varying customer preferences and business practices; and an
electronic backbone uniting Arrow's European partners with one
another and with Arrow worldwide to leverage inventory investment
and better meet the needs of customers in all of Europe's leading
industrial electronics markets. In most of these markets, Arrow
companies hold the number one position: Arrow Electronics (UK) Ltd.
in Britain; Spoerle Electronic in Central Europe; Silverstar Ltd.
S.p.A. in Italy; and Amitron-Arrow and ATD Electronica S.A. in Spain
and Portugal. Arrow Electronique and Megachip form the largest
electronics distribution group in France, and Arrow's Nordic
companies, Field Oy, TH:s Elektronik, and Exatec A/S, are among the
largest distributors in the markets of Finland, Norway, Sweden, and
Denmark.
Arrow is the first American electronics distributor to be
present in the Asia/Pacific markets. Arrow's Components Agent
Limited (C.A.L.) and Lite-On Group are the region's leading
multinational distributor. C.A.L., headquartered in Hong Kong,
maintains additional facilities in key cities in Singapore,
Malaysia, the People's Republic of China, and South Korea. In early
1995, the company acquired Lite-On Group and Ally, Inc. Lite-On,
headquartered in Taipei, serves customers in Taiwan, South Korea,
Singapore, and Malaysia. Ally serves customers in Taipei; an
additional Arrow company serves India. Within these dynamic
markets, Arrow is benefiting from two important growth factors: the
decision by many of Arrow's traditional North American customers to
locate production facilities in the region and the surging demand
for electronic products resulting from rising living standards and
massive investments in infrastructure.
The company distributes a broad range of electronic
components, computer products, and related equipment manufactured by
others. About 66% of the company's consolidated sales are of
semiconductor products; industrial and commercial computer products,
including microcomputer boards and systems, design systems, desktop
computer systems, terminals, printers, disc drives, controllers, and
communication control equipment account for about 25%; and the
remaining sales are of passive, electromechanical, and interconnect
products, principally capacitors, resistors, potentiometers, power
supplies, relays, switches and connectors.
Most manufacturers of electronic components and computer
products rely on independent authorized distributors, such as the
company, to augment their product marketing operations. As a
stocking, marketing and financial intermediary, the distributor
relieves its manufacturers of a portion of the costs and personnel
associated with stocking and selling their products (including
otherwise sizable investments in finished goods inventories and
3
accounts receivable), while providing geographically dispersed
selling, order processing, and delivery capabilities. At the same
time, the distributor offers a broad range of customers the
convenience of diverse inventories and rapid or scheduled
deliveries. The growth of the electronics distribution industry has
been fostered by the many manufacturers who recognize their
authorized distributors as essential extensions of their marketing
organizations.
The company and its affiliates serve approximately 140,000
industrial and commercial customers in North America, Europe, and
the Asia/Pacific region. Industrial customers range from major
original equipment manufacturers to small engineering firms, while
commercial customers include value-added resellers, small systems
integrators, and large end-users. Most of the company's customers
require delivery of the products they have ordered on schedules that
are generally not available on direct purchases from manufacturers,
and frequently their orders are of insufficient size to be placed
directly with manufacturers. No single customer accounted for more
than 1% of the company's 1994 sales.
The electronic components and other products offered by the
company are sold by field sales representatives, who regularly call
on customers in assigned market areas, and by telephone from the
company's selling locations, from which inside sales personnel with
access to pricing and stocking data provided by computer display
terminals accept and process orders. Each of the company's North
American selling locations, warehouses, and primary distribution
centers is electronically linked to the business' central computer,
which provides fully integrated, on-line, real-time data with
respect to nationwide inventory levels and facilitates control of
purchasing, shipping, and billing. The company's foreign operations
utilize Arrow's Worldwide Stock Check System, which affords access
to the company's on-line, real-time inventory system.
Of the approximately 350 manufacturers whose products are sold
by the company, the ten largest accounted for about 65% of the
business' purchases during 1994. Intel Corporation and Texas
Instruments accounted for approximately 21% and 10%, respectively,
of the business' purchases because of the market demand for
microprocessors. No other supplier accounted for more than 9% of
1994 purchases. The company does not regard any one supplier of
products to be essential to its operations and believes that many of
the products presently sold by the company are available from other
sources at competitive prices. Most of the company's purchases are
pursuant to authorized distributor agreements which are typically
cancelable by either party at any time or on short notice.
Approximately 65% of the company's inventory consists of
semiconductors. It is the policy of most manufacturers to protect
authorized distributors, such as the company, against the potential
write-down of such inventories due to technological change or
manufacturers' price reductions. Under the terms of the related
distributor agreements, and assuming the distributor complies with
certain conditions, such suppliers are required to credit the
distributor for inventory losses incurred through reductions in
manufacturers' list prices of the items. In addition, under the
terms of many such agreements, the distributor has the right to
return to the manufacturer for credit a defined portion of those
inventory items purchased within a designated period of time. A
manufacturer who elects to terminate a distributor agreement is
4
generally required to purchase from the distributor the total amount
of its products carried in inventory. While these industry
practices do not wholly protect the company from inventory losses,
management believes that they currently provide substantial
protection from such losses.
The company's business is extremely competitive, particularly
with respect to prices, franchises, and, in certain instances,
product availability. The company competes with several other large
multinational, national, and numerous regional and local,
distributors. As the world's largest electronics distributor, the
company is greater in terms of financial resources and sales than
most of its competitors.
The company and its affiliates employ approximately 6,500
people worldwide.
Executive Officers
The following table sets forth the names and ages of, and the
positions and offices with the company held by, each of the
executive officers of the company.
Name Age Position or Office Held
Stephen P. Kaufman 53 Chairman and Chief Executive
Officer
John C. Waddell 57 Vice Chairman
Robert E. Klatell 49 Senior Vice President, Chief
Financial Officer, General Counsel,
Secretary, and Treasurer
Philip D. Ellett 42 Vice President; President
Gates/Arrow Distributing, Inc.
Carlo Giersch 57 President and Chief Executive
Officer of Spoerle Electronic
Steven W. Menefee 50 Vice President; President,
Arrow/Schweber Electronics Group
John J. Powers, III 40 Vice President; President,
Anthem Electronics
Wesley S. Sagawa 47 Vice President; President, Capstone
Electronics Corp.
Jan Salsgiver 38 Vice President; President, Zeus
Electronics
Robert S. Throop 57 Vice President; Chairman and
Chief Executive Officer,
Anthem Electronics
Set forth below is a brief account of the business experience
during the past five years of each executive officer of the company.
Stephen P. Kaufman has been Chairman since May 1994 and
President and Chief Executive Officer of the company for more than
five years prior thereto.
John C. Waddell has been Vice Chairman of the company since
May 1994 and Chairman for more than five years prior thereto.
Robert E. Klatell has been Senior Vice President and has
served as General Counsel and Secretary of the company for more than
five years. He has been Chief Financial Officer since January 1992
and Treasurer of the company since October 1990.
5
Philip D. Ellett became a Vice President of the company and
President of Gates/Arrow Distributing, Inc. in September 1994,
following the acquisition of Gates/FA Distributing, Inc. He had
been President of Gates/FA Distributing, Inc. since December 1990
and prior thereto he was Executive Vice President.
Carlo Giersch has been President and Chief Executive Officer
of Spoerle Electronic for more than five years.
Steven W. Menefee has been a Vice President of the company and
President of the company's Arrow/Schweber Electronics Group since
November 1990. For more than five years prior thereto, he was a
Vice President of Avnet, Inc., principally an electronics
distributor, and an executive of Avnet's Electronic Marketing Group.
John J. Powers, III became a Vice President of the company in
November 1994, following the acquisition of Anthem Electronics, Inc.
He has been President of Anthem Electronics since June 1992; prior
thereto he was Senior Vice President of Anthem Electronics.
Wesley S. Sagawa has been a Vice President of the company and
President of Capstone Electronics Corp., the company's subsidiary
which markets passive, electromechanical, and interconnect products
for more than five years.
Jan Salsgiver has been a Vice President of the company since
September 1993 and President of the company's Zeus Electronics since
July 1993. For more than five years prior thereto, she held a
variety of senior marketing positions in the company, the most
recent of which was Vice President, Semiconductor Marketing of the
Arrow/Schweber Electronics Group.
Robert S. Throop has been Chairman and Chief Executive Officer
of Anthem Electronics, Inc. for more than five years. He became a
Vice President of the company in March 1995.
Item 2. Properties.
The company's executive office, located in Melville, New York,
is owned by the company. The company occupies additional locations
under leases due to expire on various dates to 2016. Six
additional facilities are owned by the company, and another facility
has been sold and leased back in connection with the financing
thereof.
Item 3. Legal Proceedings.
Through a wholly-owned subsidiary, Schuylkill Metals
Corporation, the company was previously engaged in the refining and
selling of lead. In September 1988, the company sold its refining
business.
In mid-1986 the refining business ceased operations at its
battery breaking facility in Plant City, Florida, which facility had
been placed on the list of hazardous waste sites targeted for
cleanup under the federal Super Fund Program. The Plant City site
was not sold to the purchaser of the refining business, and the
company remains subject to various environmental cleanup obligations
at the site under federal and state law. During 1991, the company
engaged in settlement negotiations with the EPA, resulting in the
execution of a consent decree defining those obligations which was
6
entered by a federal court in Florida and became effective on April
22, 1992. The consent decree requires the company to fund and
implement remedial design and remedial action activity addressing
environmental impacts to site soils and sediment, underlying ground
water, and wetland areas. The company, through its technical
contractors, has begun implementation of these requirements and
substantial progress has been made in each of the areas requiring
remediation. Remediation of the wetlands areas on the site,
including the creation of certain new wetlands areas under agreement
with the EPA and the Florida Department of Environmental
Conservation, has been substantially completed. A waste water
treatment plant has been built on site by the company's contractors,
and processing of ground and pond water for discharge to the Plant
City Treatment Works has commenced. A contract for the
stabilization of contaminated soils has been let and stabilization
facilities erected. Soil processing has begun and material meeting
the specifications of the consent decree are being produced. The
extent of such remediation activities (including the estimated cost
thereof and the time necessary to complete them), however, is
subject to change based upon conditions actually encountered during
remediation. Moreover, the EPA reserves the right to seek
additional action if it subsequently finds further contamination or
other conditions rendering the work insufficiently protective of
human health or the environment. The company believes that the
amount expected to be expended in any year to fund such activities
will not have a material adverse impact on the company's liquidity,
capital resources or results of operations.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
PART II
Item 5. Market for the Registrant's Common Equity and
Related Stockholder Matters.
Market Information
The company's common stock is listed on the New York Stock
Exchange (trading symbol: "ARW"). The high and low sales prices
during each quarter of 1994 and 1993 were as follows:
Year High Low
1994:
Fourth Quarter $38-5/8 $33-3/4
Third Quarter 40-1/8 35-1/8
Second Quarter 41-1/8 33-5/8
First Quarter 45-1/8 36-1/8
1993:
Fourth Quarter $42-1/4 $33-5/8
Third Quarter 43-1/8 34-5/8
Second Quarter 36-1/4 29-3/4
First Quarter 34-3/8 26-1/2
7
Holders
On March 8, 1995, there were approximately 4,500 shareholders
of record of the company's common stock.
Dividend History and Restrictions
The company has not paid cash dividends on its common stock
during the past two years. While the Board of Directors considers
the payment of dividends on the common stock from time to time, the
declaration of future dividends will be dependent upon the company's
earnings, financial condition, and other relevant factors.
The terms of the company's U.S. credit agreement, senior
notes, and certain foreign debt (see Note 4 of the Notes to
Consolidated Financial Statements) restrict the payment of cash
dividends, limit long-term debt and short-term borrowings, and
require that the ratio of earnings to interest expense, ratio of
operating cash flow to interest expense, working capital, net worth,
and tangible net worth be maintained at designated levels.
8
Item 6. Selected Financial Data
The following table sets forth certain selected consolidated financial
data and should be read in conjunction with the company's consolidated
financial statements and related notes appearing elsewhere in this Annual
Report.
<TABLE>
<CAPTION>
SELECTED FINANCIAL DATA (a)
(In thousands except per share data)
For the year: 1994(b) 1993(c)(d) 1992 1991(e) 1990
<S> <C> <C> <C> <C> <C>
Sales $4,649,234 $3,560,856 $2,423,033 $1,658,177 $1,542,672
Operating income 255,974 226,089 163,699 79,201 74,527
Equity in earnings of affiliated
companies - 1,673 6,550 5,657 6,395
Interest expense 36,168 26,573 31,607 31,247 31,667
Earnings before extraordinary
charges 111,889 106,559 84,885 33,889 32,962
Extraordinary charges, net of
income taxes - - 5,424 - -
Net income $ 111,889 $ 106,559 $ 79,461 $ 33,889 $ 32,962
Per common share:
Earnings before
extraordinary charges(f) $ 2.40 $ 2.33 $ 2.05 $ 1.05 $ 1.13
Extraordinary charges - - (.14) - -
Net income (f) $ 2.40 $ 2.33 $ 1.91 $ 1.05 $ 1.13
At year-end:
Accounts receivable and
inventories $1,422,457 $1,094,175 $ 781,267 $ 696,440 $ 478,561
Total assets 2,038,774 1,569,152 1,080,163 995,064 676,327
Long-term debt, including
current portion 250,634 195,165 117,517 243,640 105,104
Subordinated debentures, including
current portion 125,000 125,000 125,000 105,965 107,300
Total long-term debt and
subordinated debentures 375,634 320,165 242,517 349,605 212,404
Shareholders' equity 837,885 701,799 566,100 392,293 287,175
(a) In 1994, Arrow acquired Gates/FA Distributing, Inc. ("Gates") and Anthem
Electronics, Inc. ("Anthem") in transactions accounted for as poolings of
interests. Accordingly, all financial information has been restated to include the
operations of Gates and Anthem.
(b) Includes special charges of $45.3 million reflecting expenses associated with the
integration of Gates and Anthem. Excluding these charges, operating income, net income,
and net income per share were $301.3 million, $140.7 million, and $3.02, respectively.
(c) Includes results of Spoerle Electronic, which were accounted for under the equity method
prior to January 1993 when Arrow increased its holdings to a majority interest (see Note
2 of the Notes to Consolidated Financial Statements).
(d) Net income is after a restructuring charge of $7.8 million reflecting the disposition of
the Eagle Technology Business Unit by Anthem. Excluding this charge, operating income,
net income, and net income per share were $233.9 million, $111.1 million, and $2.43,
respectively.
(e) Includes a special charge of $9.8 million reflecting expenses associated with the
integration of the North American electronics distribution businesses of Lex Service PLC
acquired in September 1991. Excluding this charge, operating income, net income, and net
income per share were $89 million, $40.4 million, and $1.29, respectively.
(f) After preferred stock dividends of $.9 million in 1993, $3.9 million in 1992, $4.6
million in 1991, and $4.9 million in 1990.
</TABLE>
9
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
For an understanding of the significant factors that in-
fluenced the company's performance during the past three years, the
following discussion should be read in conjunction with the
consolidated financial statements and other information appearing
elsewhere in this report.
During 1994, the company acquired Gates/FA Distributing, Inc.
("Gates") and Anthem Electronics, Inc. ("Anthem") in transactions
accounted for as poolings of interests. Accordingly, the company's
consolidated financial statements have been restated to include
Gates and Anthem for all periods presented. The consolidated
financial statements do not reflect the sales attrition which may
result from the merger of Gates and Anthem with the company or the
cost savings and synergies Arrow expects to achieve. Beginning in
January 1993, the consolidated financial statements include the
consolidated results of Spoerle Electronic ("Spoerle"), which had
been accounted for under the equity method prior to January 1993
when the company increased its holdings to a majority interest. See
Note 2 of the Notes to Consolidated Financial Statements for
information with respect to the acquisitions.
Sales
Consolidated sales of $4.6 billion were 31% higher than 1993
sales of $3.6 billion. This increase principally reflects increased
activity levels in each of the company's distribution groups
throughout the world, the consolidation of Silverstar Ltd. S.p.A.
("Silverstar"), which had been accounted for under the equity method
prior to January 1994 when the company increased its holdings to a
majority interest, and, to a lesser extent, acquisitions in Europe
and the Asia/Pacific region.
In 1993, consolidated sales of $3.6 billion were 47% ahead of
1992 sales of $2.4 billion. Excluding Spoerle, sales were $3.2
billion, an advance of 32% over the year-earlier period. This sales
growth was principally due to increased activity levels in each of
the company's distribution groups, and, to a lesser extent,
acquisitions in North America, Europe, and the Asia/Pacific region,
offset in part by weaker currencies in Europe.
Consolidated sales of $2.4 billion in 1992 were 46% higher than
1991 sales of $1.7 billion. This increase principally reflected the
acquisitions of the North American and European businesses of Lex
Service PLC ("Lex") in September 1991 and February 1992,
respectively, and increased North American sales.
Operating Income
The company's consolidated operating income increased to $256
million in 1994, compared with operating income of $226.1 million in
1993. Included in the 1994 results are special integration charges
of $45.3 million associated with the integration of Gates and
Anthem. Excluding the special integration charges, operating income
was $301.3 million. The improvement in operating income, excluding
10
the special integration charges, reflects the impact of increased
sales, continued economies of scale and expense containment efforts
reducing operating expenses as a percentage of sales, and the
consolidation of Silverstar, offset in part by lower gross profit
margins. Gross profit margins decreased from prior periods as a
result of proportionately higher sales of low-margin microprocessors
and commercial computer products, coupled with competitive pricing
pressures. Operating expenses as a percentage of sales, excluding
the special integration charges, were 11.1%, the lowest in the
company's history.
In 1993, the company's consolidated operating income increased
to $226.1 million, compared with 1992 operating income of $163.7
million. The significant improvement in operating income reflected
the impact of increased sales and the consolidation of Spoerle,
offset in part by lower gross profit margins primarily reflecting
proportionately higher sales of low-margin microprocessors and
commercial computer products. Operating income in 1993 included a
restructuring charge of $7.8 million associated with the sale by
Anthem of its Eagle Technology Business Unit. Excluding this
restructuring charge, operating income was $233.9 million.
The company's 1992 consolidated operating income increased to
$163.7 million, compared with operating income of $79.2 million in
1991. Operating income in 1991 included the recognition of
approximately $9.8 million of costs associated with the integration
of the North American businesses of Lex. The significant improve-
ment in operating income in 1992 primarily reflected the impact of
the company's acquisitions, improved gross profit margins reflecting
a product mix more heavily weighted to semiconductor products, and
improved North American sales. The rapid and successful integration
of these businesses resulted in the realization of sizable economies
of scale which, when combined with increased sales, enabled the
company to reduce operating expenses as a percentage of sales from
15.3% in 1991 to 13.2% in 1992, the then lowest level in the
company's history. Such economies of scale principally resulted
from reductions in personnel performing duplicative functions and
the elimination of duplicative administrative facilities, selling
and stocking locations, and computer and telecommunications
equipment.
Interest
Interest expense of $36.2 million in 1994 increased by $9.6
million from the 1993 level. The increase principally reflected the
consolidation of Silverstar and, to a lesser extent, the interest
related to borrowings associated with acquisitions.
In 1993, interest expense decreased to $26.6 million from
$31.6 million in 1992. The decrease principally reflects the full-
year effect of the retirement during 1992 of $46 million of the
company's 13-3/4% subordinated debentures and the refinancing of the
company's remaining high-yield debt with securities bearing lower
interest rates, offset in part by the consolidation of Spoerle and
borrowings associated with acquisitions.
Interest expense of $31.6 million in 1992 increased by $.4
million from the 1991 level, reflecting the company's borrowings to
finance the cash portion of the purchase price of the North American
and European businesses of Lex, to pay fees and expenses relating to
11
the acquisitions, to refinance existing credit facilities of the
company, and to provide the company with working capital. Such
increased borrowings were partially offset by the company's
redemption of $46 million of its 13-3/4% subordinated debentures
with the proceeds from the public offering of 4,703,500 common
shares and lower effective interest rates.
Income Taxes
The company recorded a provision for taxes, excluding the
special charges associated with the integration of Gates and Anthem,
at an effective tax rate of 40.6% in 1994, compared with 41% in
1993. The lower effective tax rate is the result of increased
earnings in foreign countries with lower tax rates.
In 1993, the company's effective tax rate was 41%, compared
with 38.8% in 1992. The higher effective tax rate reflected
increased U.S. taxes resulting from higher statutory rates and the
consolidation of Spoerle.
The company recorded a provision for taxes at an effective tax
rate of 38.8% in 1992, compared with 36.8% in 1991. The higher
effective tax rate reflected the depletion of the company's remain-
ing $5.8 million U.S. net operating loss carryforwards in 1991.
Net Income
Net income in 1994 was $111.9 million, an advance from $106.6
million in 1993. Excluding the special integration charges
associated with Gates and Anthem, net income in 1994 was $140.7
million. Excluding the restructuring charge associated with the
sale by Anthem of its Eagle Technology Business Unit, net income was
$111.1 million in 1993. The increase in net income was due
principally to increased operating income offset in part by higher
interest expense.
Net income in 1993 was $106.6 million, an advance from $79.5
million in 1992 (after giving effect to extraordinary charges of
$5.4 million reflecting the net unamortized discount and issuance
expenses associated with the redemption of high-coupon subordinated
debentures and other debt in 1992). The increase in net income is
due principally to the increase in operating income and lower
interest expense offset in part by higher taxes.
The company recorded net income of $84.9 million in 1992,
before extraordinary charges aggregating $5.4 million, compared with
net income of $33.9 million in 1991. Including these charges, net
income in 1992 was $79.5 million. Included in 1991's results was a
special charge of $9.8 million ($6.5 million after taxes) associated
with the integration of the North American businesses of Lex. The
improvement in net income was principally the result of the increase
in operating income offset in part by the higher provision for
income taxes.
12
During 1994, the company increased its holdings in Silverstar
to a majority interest and, accordingly, has consolidated its
results. In 1993 and 1992, the company's share of Silverstar's net
income was included in the equity in earnings of affiliated
companies. The decrease in the equity in earnings of affiliated
companies in 1993 was the result of the consolidation of Spoerle.
Liquidity and Capital Resources
The company maintains a high level of current assets, primarily
accounts receivable and inventories. Consolidated current assets as
a percentage of total assets were approximately 76% in 1994 and
1993.
Working capital increased by $103.6 million, or 14%, compared
with 1993, as a result of increased sales, the consolidation of
Silverstar, and acquisitions. Working capital increased in 1993 by
$204.7 million, or 37%, compared with 1992, as a result of increased
sales, the consolidation of Spoerle, and acquisitions. Working
capital increased by $80.1 million in 1992 as a result of
acquisitions in Europe and increased sales.
The net amount of cash provided by operations in 1994 was
$125.2 million, the principal element of which was the cash flow
resulting from higher net earnings offset in part by increased
working capital needs to support sales growth. The net amount of
cash used by the company for investing purposes was $122.9 million,
including $108.5 million for various acquisitions (see Note 2 of the
Notes to Consolidated Financial Statements for additional
information regarding these acquisitions). Cash flows from
financing activities were $13.4 million, principally from increased
borrowings in part to finance the 1994 acquisitions in Europe and
the Asia/Pacific region.
The net amount of cash provided by operations in 1993 was
$35.7 million, the principal element of which was the cash flow
resulting from higher net earnings offset by increased working
capital needs to support sales growth. The net amount of cash used
by the company for investing activities amounted to $114.8 million,
including $87.9 million for various acquisitions. Cash flows from
financing activities were $122.2 million, principally resulting from
increased borrowings to finance the 1993 acquisitions in the U.S.,
Europe, and the Asia/Pacific region (see Note 2 of the Notes to
Consolidated Financial Statements for additional information
regarding these acquisitions).
In September 1993, the company completed the conversion of all
of its outstanding series B $19.375 convertible exchangeable
preferred stock into 1,009,086 shares of its common stock. This
conversion eliminated the company's obligation to pay $1.3 million
of annual dividends.
The net amount of cash provided by operating activities in
1992 was $76 million, attributable primarily to the net earnings of
the company. The net amount of cash used by the company for
investing activities amounted to $57.3 million, including $37.2
million for acquisitions in Europe.
13
The aggregate cost of the company's acquisition of the
electronics distribution businesses of Lex in the U.K. and France,
and Spoerle's acquisition of the Lex electronics distribution
business in Germany, was $52 million, of which $32 million was paid
in cash and $20 million was paid in the form of a senior
subordinated note due in June 1997. The company financed the cash
portion of the purchase price through the sale of 66,196 shares of
series B convertible exchangeable preferred stock and U.K. bank
borrowings. In addition, a portion of the proceeds from the
company's public offering of common stock and the issuance of the 5-
3/4% convertible subordinated debentures was used to repay the
senior subordinated note.
The net amount of cash used for financing activities in 1992
was $21.1 million, principally reflecting the redemption of high-
yield subordinated debentures, repayment of long-term debt, and the
payment of preferred stock dividends and financing fees, offset by
the public offering of 4,703,500 shares of common stock and the 5-
3/4% convertible subordinated debentures, the issuance of the senior
secured notes, and U.K. bank borrowings.
In September 1992, the company completed the conversion of all
of its outstanding depositary shares, each representing one-tenth
share of its $19.375 convertible exchangeable preferred stock, into
3,615,056 shares of its common stock. This conversion eliminated
the company's obligation to pay $4.6 million of annual dividends
relating to the depositary shares.
14
Item 8. Financial Statements.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors and Shareholders
Arrow Electronics, Inc.
We have audited the accompanying consolidated balance sheet of Arrow
Electronics, Inc. as of December 31, 1994 and 1993, and the related
consolidated statements of income, cash flows and shareholders'
equity for each of the three years in the period ended December 31,
1993. Our audits also included the financial statement schedules
listed in the Index at Item 14(a). These financial statements and
schedules are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial
statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the consolidated
financial position of Arrow Electronics, Inc. at December 31, 1994
and 1993, and the consolidated results of its operations and its
cash flows for each of the three years in the period ended December
31, 1994, in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement
schedules, when considered in relation to the basic financial
statements taken as a whole, present fairly in all material respects
the information set forth therein.
ERNST & YOUNG LLP
New York, New York
February 22, 1995
15
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING
The consolidated financial statements of Arrow Electronics,
Inc. have been prepared by management, which is responsible for
their integrity and objectivity. These statements, prepared in
accordance with generally accepted accounting principles, reflect
our best use of judgment and estimates where appropriate.
Management also prepared the other information in the annual report
and is responsible for its accuracy and consistency with the
consolidated financial statements.
The company's system of internal controls is designed to
provide reasonable assurance that company assets are safeguarded
from loss or unauthorized use or disposition, and that transactions
are executed in accordance with management's authorization and are
properly recorded. In establishing the basis for reasonable
assurance, management balances the costs of the internal controls
with the benefits they provide. The system contains self-monitoring
mechanisms, and compliance is tested through an extensive program of
site visits and audits by the company's operating controls staff.
The Audit Committee of the Board of Directors, consisting
entirely of outside directors, meets regularly with management,
operating controls staff, and independent auditors, and reviews
audit plans and results as well as management's actions taken in
discharging its responsibilities for accounting, financial
reporting, and internal controls. Management, operating controls
staff, and independent auditors have direct and confidential access
to the Audit Committee at all times.
The company's independent auditors, Ernst & Young LLP, were
engaged to audit the consolidated financial statements in accordance
with generally accepted auditing standards. These standards include
a study and evaluation of internal controls for the purpose of
establishing a basis for reliance thereon relative to the scope of
their audit of the consolidated financial statements.
Stephen P. Kaufman
Chairman and Chief Executive Officer
Robert E. Klatell
Senior Vice President and
Chief Financial Officer
16
<TABLE>
ARROW ELECTRONICS, INC.
CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
ASSETS
<CAPTION>
December 31,
1994 1993
<S> <C> <C>
Current assets:
Cash and short-term investments................................... $ 105,606 $ 80,962
Accounts receivable, less allowance for doubtful
accounts ($31,132 in 1994 and $24,263 in 1993).................. 697,021 501,747
Inventories....................................................... 725,436 592,428
Prepaid expenses and other assets................................. 30,180 27,179
Total current assets................................................ 1,558,243 1,202,316
Property, plant and equipment at cost
Land.............................................................. 11,970 12,076
Buildings and improvements........................................ 53,962 43,107
Machinery and equipment........................................... 84,740 71,499
150,672 126,682
Less accumulated depreciation and amortization.................... 60,857 48,438
89,815 78,244
Investment in affiliated company.................................... - 13,371
Cost in excess of net assets of companies acquired,
less accumulated amortization ($36,057 in 1994
and $26,233 in 1993).............................................. 334,297 216,221
Other assets........................................................ 56,419 59,000
$2,038,774 $1,569,152
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable.................................................. $ 411,766 $ 264,121
Accrued expenses.................................................. 191,574 131,902
Short-term borrowings, including current maturities of
long-term debt.................................................. 86,123 41,075
Total current liabilities........................................... 689,463 437,098
Long-term debt...................................................... 224,398 189,859
Other liabilities................................................... 56,335 43,937
Subordinated debentures............................................. 125,000 125,000
Minority interest................................................... 105,693 71,459
Shareholders' equity:
Common stock, par value $1:
Authorized--80,000,000 shares
Issued--46,167,913 shares in 1994 and 45,753,346 shares in 1993 46,168 45,753
Capital in excess of par value.................................... 388,913 378,309
Retained earnings................................................. 400,089 288,200
Foreign currency translation adjustment........................... 6,367 (7,492)
841,537 704,770
Less unamortized employee stock awards and other.................. 3,652 2,971
Total shareholders' equity.......................................... 837,885 701,799
$2,038,774 $1,569,152
See accompanying notes.
</TABLE>
17
<TABLE>
ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENT OF INCOME
(In thousands except per share data)
<CAPTION>
Years Ended December 31,
1994 1993 1992
<S> <C> <C> <C>
Sales..............................................$4,649,234 $3,560,856 $2,423,033
Costs and expenses:
Cost of products sold............................ 3,832,169 2,901,648 1,938,569
Selling, general and administrative expenses..... 487,982 403,870 304,808
Depreciation and amortization.................... 27,759 21,439 15,957
Integration charges.............................. 45,350 - -
Restructuring charge............................. - 7,810 -
4,393,260 3,334,767 2,259,334
Operating income................................... 255,974 226,089 163,699
Equity in earnings of affiliated companies......... - 1,673 6,550
Interest expense................................... 36,168 26,573 31,607
Earnings before income taxes, minority interest
and extraordinary charges....................... 219,806 201,189 138,642
Provision for income taxes......................... 91,206 82,409 53,757
Earnings before minority interest
and extraordinary charges........................ 128,600 118,780 84,885
Minority interest.................................. 16,711 12,221 -
Extraordinary charges............................. - - 5,424
Net income.........................................$ 111,889 $ 106,559 $ 79,461
Net income used in per common share
calculation (reflecting deduction of
preferred stock dividends).......................$ 111,889 $ 105,679 $ 75,558
Per common share:
Primary:
Earnings before extraordinary charges..........$ 2.40 $ 2.33 $ 2.05
Extraordinary charges.......................... - - (.14)
Net income.....................................$ 2.40 $ 2.33 $ 1.91
Fully diluted:
Earnings before extraordinary charges..........$ 2.31 $ 2.22 $ 1.96
Extraordinary charges.......................... - - (.12)
Net income.....................................$ 2.31 $ 2.22 $ 1.84
Average number of common shares and common
share equivalents outstanding:
Primary........................................ 46,634 45,360 39,570
Fully diluted.................................. 50,407 49,908 43,406
See accompanying notes.
</TABLE>
18
<TABLE>
ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
<CAPTION>
Years Ended December 31,
<S> <C> <C> <C>
1994 1993 1992
Cash flows from operating activities:
Net income......................................... $111,889 $106,559 $79,461
Adjustments to reconcile net income to net
cash provided by (used for) operations:
Minority interest in earnings................... 16,711 12,221 -
Integration charges............................. 45,350 - -
Restructuring charge............................ - 7,810 -
Extraordinary charges........................... - - 5,424
Depreciation and amortization................... 29,821 23,871 18,377
Equity in undistributed earnings of
affiliated companies.......................... - (1,673) 2,551
Deferred income taxes........................... 8,167 2,678 15,018
Change in assets and liabilities, net of
effects of acquired businesses:
Accounts receivable......................... (80,315) (86,782) (14,663)
Inventories................................. (73,425) (86,158) (31,908)
Prepaid expenses and other assets........... 2,754 1,112 (447)
Accounts payable............................ 93,987 49,095 18,543
Accrued expenses............................ (37,275) 2,668 (19,381)
Other....................................... 7,511 4,281 3,015
Net cash provided by operating activities.......... 125,175 35,682 75,990
Cash flows from investing activities:
Acquisition of property, plant and equipment, net.. (22,773) (21,340) (8,750)
Cash consideration paid for acquired businesses.... (108,478) (87,875) (37,183)
Repayment by (investment in and loans to) affiliate 7,000 (7,000) (9,949)
Collection of notes receivable from
(advances to) officers........................... 1,397 1,369 (1,407)
Net cash used for investing activities............. (122,854) (114,846) (57,289)
Cash flows from financing activities:
Change in short-term borrowings ................... (35,811) 16,860 (1,520)
Proceeds from (repayment of) credit facilities..... 15,184 56,911 (121,582)
Proceeds from long-term debt....................... 36,037 24,750 86,633
Repayment of long-term debt and subordinated
debentures....................................... (6,151) (804) (199,656)
Proceeds from exercise of stock options
and warrants..................................... 4,897 5,702 9,140
Proceeds from (distributions to) minority partners. (524) 2,993 -
Proceeds from common stock offering................ - 17,705 74,258
Proceeds from issuance of subordinated debentures.. - - 125,000
Proceeds from preferred stock offering............. - - 15,721
Dividends paid..................................... - (880) (4,609)
Financing fees paid................................ (200) (1,041) (4,467)
Net cash provided by (used for) financing activities 13,432 122,196 (21,082)
Effect of exchange rate changes on cash.............. 7,779 314 (2,162)
Net increase (decrease) in cash and
short-term investments............................. 23,532 43,346 (4,543)
Cash and short-term investments at
beginning of year.................................. 80,962 10,559 15,102
Cash and short-term investments from affiliate
at beginning of year............................... 1,112 27,057 -
Cash and short-term investments at end of year....... $105,606 $ 80,962 $ 10,559
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Income taxes..................................... $ 92,514 $ 62,904 $ 29,917
Interest......................................... 31,753 22,228 33,436
See accompanying notes.
</TABLE>
19
<TABLE>
ARROW ELECTRONICS,INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(In thousands)
<CAPTION>
Preferred Common Foreign Unamortized
Stock Stock Capital in Currency Employee
at Par at Par Excess of Retained Translation Stock Awards
Value Value Par Value Earnings Adjustment and Other Total
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1991
as previously reported $237 $19,920 $199,680 $ 3,799 $ 2,851 $ (651) $225,836
Pooling of interests with
Gates/FA Distributing, Inc. - 2,740 13,586 965 - - 17,291
Pooling of interests with
Anthem Electronics, Inc. - 10,277 35,984 102,905 - - 149,166
Balance as restated 237 32,937 249,250 107,669 2,851 (651) 392,293
Net income - - - 79,461 - - 79,461
Issuance of common stock - 5,474 68,784 - - - 74,258
Issuance of preferred stock 66 - 15,655 - - - 15,721
Conversion of preferred stock (237) 3,615 (3,698) - - - (320)
Exercise of stock options - 1,428 8,740 - - 11 10,179
Exercise of stock warrants - 14 141 - - - 155
Tax benefits related to
exercise of stock options - - 10,538 - - - 10,538
Restricted stock awards, net - 84 920 - - (1,004) -
Amortization of employee
stock awards - - - - - 500 500
Advances to officers for
exercise of stock options - - - - - (2,601) (2,601)
Preferred stock cash dividends - - - (4,609) - - (4,609)
Translation adjustments - - - - (9,369) (9,369)
Other - - (105) - - (1) (106)
Balance at December 31, 1992 66 43,552 350,225 182,521 (6,518) (3,746) 566,100
Net income - - - 106,559 - - 106,559
Issuance of common stock - 562 17,143 - - - 17,705
Conversion of preferred stock (66) 1,009 (991) - - - (48)
Exercise of stock options - 537 4,640 - - 13 5,190
Exercise of stock warrants - 45 467 - - - 512
Tax benefits related to
exercise of stock options - - 5,590 - - - 5,590
Restricted stock awards, net - 48 1,235 - - (1,283) -
Amortization of employee
stock awards - - - - - 731 731
Collection of notes receivable
from officers - - - - - 1,369 1,369
Accrued interest - - - - - (55) (55)
Preferred stock cash dividends - - - (880) - - (880)
Translation adjustments - - - - (974) - (974)
Balance at December 31, 1993 - 45,753 378,309 288,200 (7,492) (2,971) 701,799
Net income - - - 111,889 - - 111,889
Exercise of stock options - 337 4,560 - - - 4,897
Tax benefits related to
exercise of stock options - - 3,147 - - - 3,147
Restricted stock awards, net - 78 2,897 - - (2,975) -
Amortization of employee
stock awards - - - - - 1,182 1,182
Collection of notes receivable
from officers - - - - - 1,397 1,397
Advances to officers for
exercise of stock options - - - - - (173) (173)
Accrued interest - - - - - (112) (112)
Translation adjustments - - - - 13,859 - 13,859
Balance at December 31, 1994 $ - $46,168 $388,913 $400,089 $ 6,367 $(3,652) $837,885
See accompanying notes.
</TABLE>
20
ARROW ELECTRONICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1994, 1993, AND 1992
1. Summary of Significant Accounting Policies
Basis of Presentation
In 1994, the company acquired Gates/FA Distributing, Inc.
("Gates") and Anthem Electronics, Inc. ("Anthem") in transactions
accounted for as poolings of interests. Accordingly, the
consolidated financial statements have been restated to include
the operations of Gates and Anthem.
Certain prior year balances have been reclassified to conform to
the current year's presentation.
Principles of Consolidation
The consolidated financial statements include the accounts of the
company and its majority-owned subsidiaries. The company's
investments in affiliated companies which are not majority-owned
are accounted for using the equity method. All significant
intercompany transactions are eliminated.
Inventories
Inventories are stated at the lower of cost or market. Cost is
determined on the first-in, first-out (FIFO) method.
Property and Depreciation
Depreciation is computed on the straight-line method for financial
reporting purposes and on accelerated methods for tax reporting
purposes. Leasehold improvements are amortized over the shorter
of the term of the related lease or the life of the improvement.
Cost in Excess of Net Assets of Companies Acquired
The cost in excess of net assets of companies acquired is being
amortized on a straight-line basis, principally over 40 years.
Foreign Currency
The assets and liabilities of foreign operations are translated at
the exchange rates in effect at the balance sheet date, with the
related translation gains or losses reported as a separate compo-
nent of shareholders' equity. The results of foreign operations
are translated at the weighted average exchange rates for the
year. The company has entered into forward foreign exchange
contracts to hedge payments on purchased inventory. Gains and
losses are deferred and included in other assets or other
liabilities, respectively. They are recognized in income when
payments are made.
21
ARROW ELECTRONICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
Income Taxes
Income taxes are accounted for under the liability method.
Deferred taxes reflect the tax consequences on future years of
differences between the tax bases of assets and liabilities and
their financial reporting amounts.
Net Income Per Common Share
Net income per common share for 1994 is based upon the weighted
average number of common shares outstanding and common share
equivalents of 634,739. Net income per common share on a fully
diluted basis assumes that the 5-3/4% convertible subordinated
debentures were converted to common stock at the beginning of the
year and the related interest expense, net of taxes, was eliminated.
Net income per common share for 1993 is based upon the weighted
average number of common shares outstanding and common share
equivalents of 828,212 after deducting preferred stock dividends
related to the series B $19.375 convertible exchangeable preferred
stock (the "series B preferred stock"), which was converted into
common stock in September 1993. Net income per common share on a
fully diluted basis assumes that the series B preferred stock and
the 5-3/4% convertible subordinated debentures were converted to
common stock at the beginning of the year. The dividends related to
the series B preferred stock and the interest expense on the 5-3/4%
convertible subordinated debentures, net of taxes, were eliminated.
Net income per common share for 1992 is based upon the weighted
average number of common shares outstanding and common share
equivalents of 1,241,108 after deducting preferred stock dividends
related to the $19.375 convertible exchangeable preferred stock,
which was converted into common stock in September 1992, and the
series B preferred stock. Net income per common share on a fully
diluted basis assumes that the $19.375 convertible exchangeable
preferred stock was converted to common stock at the beginning of
the year and the series B preferred stock issued in February 1992
and the 5-3/4% convertible subordinated debentures issued in
November 1992 were converted to common stock at their respective
dates of issuance. The dividends related to the $19.375 convertible
exchangeable preferred stock and the series B preferred stock, and
the interest expense on the 5-3/4% convertible subordinated
debentures, net of taxes, were eliminated. The 9% convertible
subordinated debentures are not assumed to be converted into common
stock in 1992 as they would have been antidilutive.
Cash and Short-term Investments
Short-term investments which have a maturity of ninety days or less
at time of purchase are considered cash equivalents in the statement
of cash flows. The carrying amount reported in the balance sheet
for short-term investments approximates its fair value.
22
ARROW ELECTRONICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
2. Acquisitions of Electronics Distribution Businesses
On August 29, 1994, the company acquired Gates through the exchange
of approximately 3,743,000 shares of newly issued company stock. On
November 26, 1994, the company acquired Anthem through the exchange
of approximately 10,803,000 shares of newly issued company stock.
These acquisitions were accounted for as poolings of interests and,
accordingly, the company's consolidated financial statements have
been restated to include the operations of Gates and Anthem for all
periods presented. As Gates' fiscal year-end had been June 30, its
year-end and reported financial results have been adjusted to
conform to the financial presentation of the company.
Combined revenues and net income of the company, Gates, and Anthem
are as follows:
<TABLE>
<CAPTION>
1994 1993 1992
(In thousands)
<S> <C> <C> <C>
Revenues:
Arrow $3,712,880 $2,535,584 $1,621,535
Gates 313,974 362,079 263,136
Anthem 622,380 663,193 538,362
Combined $4,649,234 $3,560,856 $2,423,033
Net income:
Arrow $ 87,913 $ 81,559 $ 44,820
Gates 3,814 6,988 4,207
Anthem 20,162 18,012 30,434
Combined $ 111,889 $ 106,559 $ 79,461
</TABLE>
The combined financial summaries do not reflect the cost savings
expected to be achieved from the combination of Gates and Anthem
with the company's business or the sales attrition which may result.
The cost savings will result principally from reductions in
personnel performing duplicative functions and the elimination of
duplicative administrative facilities, selling and stocking
locations, and computer and telecommunications equipment.
The combined financial summary for 1994 includes special charges of
$45,350,000 before taxes ($.62 per share on a primary basis) of
costs associated with the integration of the Gates and Anthem
businesses and related transaction fees. Such integration costs
include real estate termination costs and severance and other
expenses related to personnel performing duplicative functions.
23
ARROW ELECTRONICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
In January 1994, the company acquired an additional 15% share of
Spoerle Electronic Handelsgesellschaft mbH and Co. and its general
partner, Spoerle GmbH (collectively "Spoerle"), the largest
distributor of electronic components in Germany, increasing its
holdings to 70%. The company also acquired an additional 11% share
of Silverstar Ltd. S.p.A. ("Silverstar"), the largest distributor of
electronic components in Italy, increasing its holdings to 61%. In
addition, the company acquired Field Oy, the largest distributor of
electronic components in Finland. In February, the company acquired
TH:s Elektronik AB, a prominent distribution group headquartered in
Stockholm. In April, the company acquired Copenhagen-based Exatec
A/S, one of Denmark's largest distributors. In May, the company
acquired Texny Glorytact (HK) Limited, a large semiconductor
specialist in Hong Kong. In October, the company acquired The
Megachip Group, a large distributor of memory and computer products
in France, Germany, and the U.K. In November, the company acquired
Veltek Australia Pty Ltd. and Zatek Australia Pty Ltd., two
Melbourne-based broadline distributors. The Veltek/Zatek group is
one of Australia's leading distributors. The aggregate cost of these
acquisitions was $98,734,000. Each acquisition was accounted for as
a purchase transaction beginning in the month of acquisition.
A summary of the allocation of the aggregate consideration paid for
the aforementioned acquisitions, except Spoerle and Silverstar, to
the fair market value of the assets acquired and liabilities assumed
is as follows (in thousands):
<TABLE>
<S> <C> <C>
Current assets:
Accounts receivable $37,381
Inventories 23,305
Other 924 $ 61,610
Property, plant and equipment 5,820
Cost in excess of net assets
of companies acquired 68,375
Other assets 415
136,220
Current liabilities:
Accounts payable $26,807
Accrued expenses 13,533
Other 29,699 70,039
Net consideration paid $ 66,181
</TABLE>
During 1994, the company made additional payments of $9,744,000 in
connection with acquisitions in prior years. These payments were
contingent upon the acquired businesses achieving certain operating
income or net income levels. The contingent payments are capitalized
as cost in excess of net assets of companies acquired.
In January 1993, the company acquired an additional 15% share of
Spoerle, increasing its holdings to 55%. In May, the company
acquired the high-reliability electronic component distribution and
value-added service businesses of Zeus Components, Inc. In June,
24
ARROW ELECTRONICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
the company acquired Microprocessor & Memory Distribution Limited,
a U.K.-based electronics distributor which focuses on the
distribution of high-technology semiconductor products. In August,
the company acquired Components Agent Limited, one of the largest
electronics distributors in Hong Kong. During the third quarter of
1993, the company acquired a majority interest in Amitron S.A. and
the ATD Group, electronics distributors serving the Spanish and
Portuguese markets. In November, the company augmented its French
operations by acquiring CCI Electronique. The aggregate cost of
these acquisitions was $87,875,000, including $4,757,000 for non-
competition agreements. Each acquisition was accounted for as a
purchase transaction beginning in the month of acquisition.
3. Investments in Affiliated Companies
At December 31, 1993, the company had a 50% interest in Silverstar.
Prior to 1993, when it increased its holdings to a 55% majority
interest, the company had a 40% interest in Spoerle. The investment
in Silverstar through 1993 was accounted for using the equity
method, as was the investment in Spoerle prior to 1993. For the
year ended December 31, 1993, Silverstar recorded net sales of
$158,546,000, gross profit of $46,111,000, income before taxes of
$8,959,000 and net income of $4,000,000. For the year ended
December 31, 1992, Spoerle and Silverstar recorded net sales of
$487,179,000, gross profit of $135,200,000, income before income
taxes of $32,185,000, and net income of $26,082,000.
4. Debt
Long-term debt at December 31, 1994 and 1993 consisted of the
following:
<TABLE>
<CAPTION>
1994 1993
(In thousands)
<S> <C> <C>
8.29% senior notes due 2000............ $ 75,000 $ 75,000
U.S. credit agreement due 1998......... 20,000 35,000
U.S. short-term credit agreements...... 47,100 -
U.S. loan agreement due 1995........... 20,000 35,151
Deutsche mark term loan due 2000....... 45,170 28,794
Pound sterling term loan due 1999...... 28,823 18,596
Other obligations with various
interest rates........................ 14,541 2,624
250,634 195,165
Less installments due within one year .. 26,236 5,306
$224,398 $189,859
</TABLE>
The senior notes are payable in three equal annual
installments commencing in 1998. The senior notes restrict the
payment of cash dividends, limit long-term debt and short-term
borrowings, and require net worth and the ratio of operating cash
flow to interest expense be maintained at designated levels.
25
ARROW ELECTRONICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
The company's credit agreement with a group of banks (the
"U.S. credit agreement") was amended in January 1994 to release all
collateral, to increase to $175,000,000 the amount of borrowings
available, to reduce the borrowing rate, and to extend the maturity
date to January 1998. At February 22, 1995, the company had
outstanding borrowings of $35,000,000 under the U.S. credit
agreement and unused borrowing capacity of $140,000,000.
At the company's option, the interest rate for loans under the
U.S. credit agreement is at the agent bank's prevailing prime rate
(8.5% at December 31, 1994) or the U.S. dollar London Interbank
Offered Rate ("LIBOR") (6% at December 31, 1994) plus .5%. The
company pays the banks a commitment fee of .1875% per annum on the
aggregate unused portion of the U.S. credit agreement.
The U.S. credit agreement restricts the payment of cash
dividends, limits long-term debt and short-term borrowings, and
requires that working capital, net worth, and the ratio of earnings
to interest expense be maintained at designated levels.
During 1994, the company obtained lines of credit (the "U.S.
short-term credit agreements") with a group of banks under which up
to $85,000,000 may be borrowed on such terms as the company and the
banks may agree. The average interest rate at December 31, 1994 was
6.59%. There are no fees or compensating balances associated with
these lines. On February 22, 1995, the company had outstanding
borrowings of $54,000,000 under such agreements and unused borrowing
capacity of $31,000,000. The agreements are also convertible into
one-year loans on their maturity dates. These agreements are
classified as long-term debt as the company intends to refinance
them on a long-term basis either through continued short-term
borrowings or the U.S. credit agreement.
The U.S. loan agreement was assumed in conjunction with the
acquisition of Gates. The interest rate is fixed at 7.38% and the
loan matures on October 27, 1995. The agreement is secured by
Gates' receivables and inventory and requires that working capital,
tangible net worth, and the ratio of earnings to interest expense be
maintained at designated levels.
The company's wholly-owned German subsidiary has a 70,000,000
deutsche mark term loan from a group of foreign banks. The loan is
payable in installments and bears interest at deutsche mark LIBOR
(5.25% at December 31, 1994) plus .75%. The loan is secured by an
assignment of the subsidiary's interest in profit distributions from
Spoerle and is guaranteed by the company. The obligations of the
company under the guarantee are subordinated to the company's
obligations under the U.S. credit agreement and the senior notes.
The company's wholly-owned U.K. subsidiary has a loan
agreement which, as amended in December 1994, includes a 15,000,000 Sterling
term loan, payable in semi-annual installments from 1995 through
1999, and a revolving credit facility which provides for loans of up
to 7,000,000 Sterling. Borrowings under the loan agreement bear interest at
sterling LIBOR (6% at December 31, 1994) plus .75% and are secured
by the assets and common stock of the subsidiary. The loan
26
ARROW ELECTRONICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
agreement also requires that operating cash flow, as defined, and
the ratio of earnings to interest expense be maintained by the
subsidiary at designated levels.
The company's $125,000,000 of 5-3/4% convertible
subordinated debentures are due in 2002. The debentures are
convertible at any time prior to maturity, unless previously
redeemed, into shares of the company's common stock, at a
conversion price of $33.125. The debentures are not redeemable at
the option of the company prior to October 1995.
In 1992, the company redeemed certain of its subordinated
debentures and the then existing term loan under the U.S. credit
agreement. The redemptions resulted in an extraordinary charge of
$5,424,000 after taxes, reflecting net unamortized discount and
issuance expenses.
The aggregate annual maturities of long-term debt and
subordinated debentures, for each of the five years in the period
ending December 31, 1999 are: 1995--$26,236,000; 1996--$60,862,000;
1997--$18,515,000; 1998--$59,802,000; and 1999--$46,557,000.
The weighted average interest rate of foreign short-term
borrowings at December 31, 1994 and 1993 was 10% and 7.82%,
respectively.
At December 31, 1994, the closing price of the 5-3/4%
convertible subordinated debentures on the New York Stock Exchange
was 114% of par. The estimated fair market value of the 8.29%
senior notes at December 31, 1994 was 98% of par. The balance of
the company's borrowings approximate their fair value.
5. Income Taxes
The provision for income taxes for 1994, 1993, and 1992
consists of the following:
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Current
Federal..................... $ 53,465 $56,519 $34,072
State....................... 15,317 13,600 9,282
Foreign..................... 28,063 9,376 -
96,845 79,495 43,354
Deferred
Federal..................... (8,437) (67) 8,514
State....................... (2,824) (241) 1,889
Foreign..................... 5,622 3,222 -
(5,639) 2,914 10,403
$ 91,206 $82,409 $53,757
</TABLE>
27
ARROW ELECTRONICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
The principal causes of the difference between the U.S.
statutory and effective income tax rates for 1994, 1993, and 1992
are as follows:
<TABLE>
<CAPTION>
1994 1993 1992
(In thousands)
<S> <C> <C> <C>
Provision at statutory rate... $76,932 $70,381 $47,139
State taxes, net of federal
benefit..................... 8,120 8,715 7,435
Foreign tax rate differential 4,841 3,448 -
Tax benefit of loss and credit
carryforwards............... - (292) (1,029)
Other differences............. 1,313 157 212
Income tax provision.......... $91,206 $82,409 $53,757
</TABLE>
For financial reporting purposes, income before income taxes
attributable to the United States, excluding the special integration
charges of $45,350,000, was $184,241,000 in 1994 and $162,578,000 in
1993, and income before income taxes attributable to foreign
operations was $80,915,000 in 1994 and $38,116,000 in 1993.
The significant components of the company's deferred tax
assets are as follows:
<TABLE>
<CAPTION>
1994 1993
(In thousands)
<S> <C> <C>
Inventory reserves............ $ 7,183 $ 6,128
Allowance for doubtful
accounts..................... 4,552 2,121
Accrued expenses.............. 9,282 8,070
Acquired net operating loss
carryforwards, net........... 639 2,931
Other.......................... 3,144 2,885
$24,800 $22,135
</TABLE>
At December 31, 1994, the company had approximately $3,000,000
of acquired U.S. net operating loss carryforwards available for tax
return purposes which expire in the years 2001 through 2006. Such
carryforwards are subject to certain annual restrictions on the
amount that can be utilized for tax return purposes. In France, the
company had approximately $9,500,000 of net operating loss
carryforwards, of which approximately $6,000,000 were acquired,
which expire through 1999. Included in other liabilities are defe-
rred tax liabilities of $19,626,000 and $12,434,000 at December 31,
1994 and 1993, respectively. The deferred tax liabilities are
principally the result of the differences in the bases of the German
assets and liabilities for tax and financial reporting purposes.
23
ARROW ELECTRONICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
6. Shareholders' Equity
The company has 2,000,000 authorized shares of serial
preferred stock with a par value of $1. In February 1992, the
company issued 66,196 shares of newly-created series B preferred
stock for approximately $15,721,000 to provide partial funding for
the acquisition of the European electronics distribution businesses
of Lex. In September 1993, the company completed the conversion of
all of its outstanding series B preferred stock into 1,009,086
shares of its common stock. This conversion eliminated
approximately $1,300,000 of annual dividends.
In 1988, the company paid a dividend of one preferred share
purchase right on each outstanding share of common stock. Each
right, as amended, entitles a shareholder to purchase one one-
hundredth of a share of a new series of preferred stock at an
exercise price of $50 (the "exercise price"). The rights are
exercisable only if a person or group acquired 20% or more of the
company's common stock or announces a tender or exchange offer that
will result in such person or group acquiring 30% or more of the
company's common stock. Rights owned by the person acquiring such
stock or transferees thereof will automatically be void. Each other
right will become a right to buy, at the exercise price, that number
of shares of common stock having a market value of twice the
exercise price. The rights, which do not have voting rights, expire
on March 2, 1998 and may be redeemed by the company at a price of
$.01 per right at any time until ten days after a 20% ownership
position has been acquired. In the event that the company merges
with, or transfers 50% or more of its consolidated assets or earning
power to, any person or group after the rights become exercisable,
holders of the rights may purchase, at the exercise price, a number
of shares of common stock of the acquiring entity having a market
value equal to twice the exercise price.
7. Employee Stock Plans
Restricted Stock Plan
Under the terms of the Arrow Electronics, Inc. Restricted
Stock Plan (the "Plan"), a maximum of 1,480,000 shares of common
stock may be awarded at the discretion of the Board of Directors to
key employees of the company. As many as 100 employees may be
considered for awards under the Plan.
Shares awarded under the Plan may not be sold, assigned,
transferred, pledged, hypothecated, or otherwise disposed of, except
as provided in the Plan. Shares awarded become free of such
restrictions over a four-year period. The company awarded 106,350
shares of common stock in early 1995 to 79 key employees in respect
of 1994, 77,350 shares of common stock to 50 key employees during
1994, 49,250 shares of common stock to 35 key employees during 1993,
and 84,000 shares of common stock to 32 key employees during 1992.
Forfeitures of shares awarded under the Plan were 1,000, 7,625, and
11,875 during 1994, 1993, and 1992, respectively. The aggregate
29
ARROW ELECTRONICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
market value of outstanding awards under the Plan at the respective
dates of award is being amortized over a four-year period and the
unamortized balance is included in shareholders' equity as unamor-
tized employee stock awards.
Stock Option Plan
Under the terms of the Arrow Electronics, Inc. Stock Option
Plan (the "Option Plan"), both nonqualified and incentive stock
options were authorized for grant to key employees at prices
determined by the Board of Directors in its discretion or, in the
case of incentive stock options, prices equal to the fair market
value of the shares at the dates of grant. Options currently
outstanding have terms of ten years and become exercisable in equal
annual installments over two or three-year periods from date of
grant. In 1994, the shareholders of the company approved an
increase in the number of shares of common stock authorized for
stock options to an aggregate of 6,000,000 shares. The options
issued and outstanding under the option plans of Gates and Anthem at
the dates of their acquisition have been converted into options to
purchase shares of the company's common stock at the same exchange
ratio as utilized in acquiring these businesses and all unissued
options under those plans were cancelled.
The following information relates to the option plans:
<TABLE>
<CAPTION>
Years ended December 31,
1994 1993 1992
<S> <C> <C> <C>
Options outstanding at
beginning of year...... 1,806,818 1,827,305 2,659,652
Granted.................. 789,123 680,228 711,639
Exercised................ (336,481) (546,857) (1,432,948)
Forfeited................ (95,422) (153,858) (111,038)
Options outstanding at
end of year............ 2,164,038 1,806,818 1,827,305
Prices per share of
options outstanding....$2.53-52.43 $2.53-52.43 $2.53-53.43
Average price per share
of options exercised... $14.44 $9.49 $7.10
Average price per share
of options outstanding. $27.82 $21.61 $15.31
Exercisable options...... 1,262,715 1,071,270 978,197
Options available for
future grant:
Beginning of year.... 2,446,345 1,270,619 1,349,632
End of year.......... 2,667,389 2,446,345 1,270,619
</TABLE>
30
ARROW ELECTRONICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
Stock Ownership Plan
The company maintains a noncontributory employee stock
ownership plan which enables most North American employees to
acquire shares of the company's common stock. Contributions, which
are determined by the Board of Directors, are in the form of company
common stock or cash which is used to purchase the company's common
stock for the benefit of participating employees. Contributions to
the plan for 1994, 1993, and 1992 aggregated $2,765,000, $2,525,000,
and $2,360,000, respectively.
8. Retirement Plan
The company has a defined contribution plan for eligible
employees, which qualifies under Section 401(k) of the Internal
Revenue Code. The company's contribution to the plan, which is
based on a specified percentage of employee contributions, amounted
to $3,235,000, $3,055,000, and $2,773,000 in 1994, 1993, and 1992,
respectively.
9. Lease Commitments
The company leases certain office, warehouse, and other
property under noncancellable operating leases expiring at various
dates through 2016. Rental expenses of noncancellable operating
leases amounted to $21,736,000 in 1994, $19,495,000 in 1993, and
$15,952,000 in 1992. Aggregate minimum rental commitments under all
noncancellable operating leases approximate $94,041,000, exclusive
of real estate taxes, insurance, and leases related to facilities
closed in connection with the integration of the acquired
businesses. Such commitments on an annual basis are:
1995-$21,691,000; 1996-$16,353,000; 1997-$12,347,000;
1998-$9,640,000; 1999-$7,838,000 and $26,172,000 thereafter. The
company's obligations under capitalized leases are reflected as a
component of other liabilities.
31
ARROW ELECTRONICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
10. Segment and Geographic Information
The company is engaged in one business segment, the distribu-
tion of electronic components, systems, and related products. The
geographic distribution of consolidated sales, operating income, and
identifiable assets for 1994 and 1993 is as follows (in thousands):
<TABLE>
<CAPTION>
Sales to Identifiable
Unaffiliated Operating Assets at
1994 Customers Income (Loss) December 31, 1994
<S> <C> <C> <C>
North America.... $3,339,210 $224,007 $1,176,196
Europe........... 1,146,726 89,879 739,863
Asia/Pacific..... 163,298 4,288 96,773
Eliminations
and Corporate.. - (16,850) 25,942
Integration charges (45,350)
$4,649,234 $255,974 $2,038,774
Sales to Identifiable
Unaffiliated Operating Assets at
1993 Customers Income (Loss) December 31,1993
North America.... $2,915,887 $208,371 $1,095,414
Europe........... 600,935 40,153 367,102
Asia/Pacific..... 44,034 1,706 57,416
Eliminations
and Corporate.. - (16,331) 35,849
Restructuring charge (7,810)
Investment in affil-
iated company 13,371
$3,560,856 $226,089 $1,569,152
</TABLE>
32
ARROW ELECTRONICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
11. Quarterly Financial Data (Unaudited)
A summary of the company's quarterly results of operations for
1994 and 1993 follows:
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
(In thousands except per share data)
<S> <C> <C> <C> <C>
1994:
Sales.......................$1,117,679 $1,113,991 $1,161,423 $1,256,141
Gross profit................ 197,584 201,362 200,916 217,203
Net income.................. 33,379 32,903 21,779 23,828
Per common share:
Primary................... .72 .71 .47 .51
Fully diluted............. .68 .68 .45 .49
Excluding integration charges, net income and net income per share
on a primary basis in the third and fourth quarters were $34,904,000
and $.75, and $39,553,000 and $.85, respectively.
First Second Third Fourth
Quarter Quarter Quarter Quarter
(In thousands except per share data)
1993:
Sales.......................$775,379 $832,113 $966,171 $987,193
Gross profit................ 155,700 157,461 173,535 172,512
Net income.................. 25,212 27,324 29,211 24,812
Per common share:
Primary................... .56 .60 .63 .54
Fully diluted............. .53 .57 .60 .52
Excluding the restructuring charge, net income and net income per
share on a primary basis in the fourth quarter were $29,311,000
and $.63, respectively.
</TABLE>
33
Item 9. Changes In and Disagreements with Accountants on
Accounting and Financial Disclosure.
None.
Part III
Item 10. Directors and Executive Officers of the Registrant.
See "Executive Officers" in the response to Item 1 above. In
addition, the information set forth under the heading "Election of
Directors" in the company's Proxy Statement filed in connection with
the Annual Meeting of Shareholders scheduled to be held May 9, 1995
hereby is incorporated herein by reference.
Item 11. Executive Compensation.
The information set forth under the heading "Executive
Compensation and Other Matters" in the company's Proxy Statement
filed in connection with the Annual Meeting of Shareholders
scheduled to be held May 9, 1995 hereby is incorporated herein by
reference.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
The information on page 3 and under the heading "Election of
Directors" in the company's Proxy Statement filed in connection with
the Annual Meeting of Shareholders scheduled to be held May 9, 1995
hereby is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions.
The information set forth under the heading "Executive
Compensation and Other Matters" in the company's Proxy Statement
filed in connection with the Annual Meeting of Shareholders
scheduled to be held May 9, 1995 hereby is incorporated herein by
reference.
Part IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K.
(a)1. Financial Statements.
The financial statements listed in the accompanying index
to financial statements and financial statement schedules are filed
as part of this annual report.
2. Financial Statement Schedules.
The financial statement schedules listed in the accompany-
ing index to financial statements and financial statement schedules
are filed as part of this annual report.
All other schedules have been omitted since the required
information is not present or is not present in amounts sufficient
to require submission of the schedule, or because the information
required is included in the consolidated financial statements,
including the notes thereto.
34
ARROW ELECTRONICS, INC.
INDEX TO FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
(Item 14 (a))
Page
Report of Ernst & Young LLP, independent auditors 15
Management's responsibility for financial reporting 16
Consolidated balance sheet at December 31, 1994 and 1993 17
For the years ended December 31, 1994, 1993 and 1992:
Consolidated statement of income 18
Consolidated statement of cash flows 19
Consolidated statement of shareholders' equity 20
Notes to consolidated financial statements for
the years ended December 31, 1994, 1993 and 1992 21
Consolidated schedules for the three years
ended December 31, 1994:
II - Valuation and qualifying accounts 47
35
3. Exhibits.
(2)(a) Restated Agreement of Purchase and
Sale, dated as of September 20, 1987, between Ducommun
Incorporated and Arrow Electronics, Inc. (incorporated by
reference to Exhibit 2(b) to the company's Registration Statement
on Form S-4, Commission File No. 33-17942).
(b) Letter Agreement dated January 11, 1988
between Ducommun Incorporated and Arrow Electronics, Inc.
(incorporated by reference to Exhibit 2(b) to the company's
Current Report on Form 8-K dated January 21, 1988, Commission File
No. 1-4482).
(c) Acquisition Agreement, dated July 28,
1988, between Craig, Hochreiter & Co., Incorporated and Arrow
Electronics, Inc., as amended and supplemented (incorporated by
reference to Exhibit 2 to the company's Quarterly Report on Form
10-Q for the quarter ended September 30, 1988, Commission File No.
1-4482).
(d)(i) Acquisition Agreement, dated July 6,
1989, between Arrow Electronics (UK) Limited and Electrocomponents
plc (incorporated by reference to Exhibit 2(d)(i) to the company's
Annual Report on Form 10-K for the year ended December 31, 1989,
Commission File No. 1-4482).
(ii) English language translation of
Acquisition Agreement, dated July 6, 1989, between Spoerle
Electronic Handelsgesellschaft mbH & Co. and Retron Manger
Electronic GmbH and Eldi GmbH Electronik Distributor (incorporated
by reference to Exhibit 2(d)(ii) to the company's Annual Report on
Form 10-K for the year ended December 31, 1989, Commission File
No. 1-4482).
(iii) Umbrella Agreement, dated July 6, 1989,
between Electrocomponents plc; Retron Elektronische Bauteile und
Gerate Handelsgesellschaft mbH, Manger Elektronik GmbH, and Eldi
GmbH Elektronik Distributor; Arrow Electronics, Inc.; Arrow
Electronics (UK) Limited; and Spoerle Electronic
Handelsgesellschaft GmbH & Co. (incorporated by reference to
Exhibit 2(d)(iii) to the company's Annual Report on Form 10-K for
the year ended December 31, 1989, Commission File No. 1-4482).
(e)(i) Agreement of Purchase and Sale, as
amended, by and among Lex Service PLC, Lex Burlington Inc., and
Arrow Electronics, Inc. (incorporated by reference to Exhibit 6(a)
to the company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1991, Commission File No. 1-4482).
(ii) Stockholders' Agreement dated as of
September 27, 1991 by and among Arrow Electronics, Inc., Lex
Service PLC, and Lex Burlington Inc. (incorporated by reference to
Exhibit 2(e)(ii) to the company's Annual Report on Form 10-K for
the year ended December 31, 1991, Commission File No. 1-4482).
(iii) Amendment No. 1 dated as of February
28, 1992 to the Stockholders' Agreement in (2)(e)(ii) above
(incorporated by reference to Exhibit 2(g)(iii) to the company's
Annual Report on Form 10-K for the year ended December 31, 1991,
Commission File No. 1-4482).
36
(iv) Amendment No. 2 dated as of July 30,
1992 to the Stockholders' Agreement in (2)(e)(ii) above
(incorporated by reference to Exhibit 2(e)(iv) to the company's
Annual Report on Form 10-K for the year ended December 31, 1992,
Commission File No. 1-4482).
(v) Amendment No. 3 dated as of February 1,
1993 to the Stockholders' Agreement in (2)(e)(ii) above
(incorporated by reference to Exhibit 2(e)(v) to the company's
Annual Report on Form 10-K for the year ended December 31, 1992,
Commission File No. 1-4482).
(vi) Registration Rights Agreement dated as
of September 27, 1991 by and among Arrow Electronics, Inc., Lex
Service PLC, and Lex Burlington Inc. (incorporated by reference to
Exhibit 2(e)(iii) to the company's Annual Report on Form 10-K for
the year ended December 31, 1991, Commission File No. 1-4482).
(vii) Amendment No. 1 dated as of February
28, 1992 to the Registration Rights Agreement in (2)(e)(vi) above
(incorporated by reference to Exhibit (2)(g)(iv) to the company's
Annual Report on Form 10-K for the year ended December 31, 1991,
Commission File No. 1-4482).
(viii) Amendment No. 2 dated as of July 30,
1992 to the Registration Rights Agreement in (2)(e)(vi) above
(incorporated by reference to Exhibit (2)(e)(viii) to the
company's Annual Report on Form 10-K for the year ended December
31, 1992, Commission File No. 1-4482).
(ix) Amendment No. 3 dated as of February 1,
1993 to the Registration Rights Agreement in (2)(e)(vi) above
(incorporated by reference to Exhibit (2)(e)(ix) to the company's
Annual Report on Form 10-K for the year ended December 31, 1992,
Commission File No. 1-4482).
(f)(i) Share Purchase Agreement dated as of
October 10, 1991 among EDI Electronics Distribution International
B.V., Aquarius Investments Ltd., Andromeda Investments Ltd., and
the other persons named therein (incorporated by reference to
Exhibit 2.2 to the company's Registration Statement on Form S-3,
Registration No. 33-42176).
(ii) Standstill Agreement dated as of
October 10, 1991 among Arrow Electronics, Inc., Aquarius
Investments Ltd., Andromeda Investments Ltd., and the other
persons named therein (incorporated by reference to Exhibit 4.1 to
the company's Registration Statement on Form S-3, Registration No.
33-42176).
(iii) Shareholder's Agreement dated as of
October 10, 1991 among EDI Electronics Distribution International
B.V., Giorgio Ghezzi, Germano Fanelli, and Renzo Ghezzi
(incorporated by reference to Exhibit 2(f)(iii) to the company's
Annual Report on Form 10-K for the year ended December 31, 1993,
Commission File No. 1-4482).
(g) Asset Purchase Agreement, dated as of
February 12, 1993, between Zeus Components, Inc. and Arrow
Electronics, Inc. (incorporated by reference to Exhibit 10(1) to
37
the company's Annual Report on Form 10-K for the year ended
December 31, 1992, Commission File No. 1-4482).
(h) Agreement dated as of February 28, 1992
among Lex Service PLC, Arrow Electronics (UK) Limited, EDI
Electronics Distribution International (France) SA, Arrow
Electronics GmbH, and Arrow Electronics, Inc. (incorporated by
reference to Exhibit 2(1) to the company's Current Report on Form
8-K, dated March 11, 1992, Commission File No. 1-4482).
(i) Subscription Agreement dated February
7, 1992, between Arrow Electronics, Inc. and various purchasers,
pertaining to the sale of the company's Series B $19.375
Convertible Exchangeable Preferred Stock (incorporated by
reference to Exhibit 2(h) to the company's Annual Report on Form
10-K for the year ended December 31, 1991, Commission File No.
1-4482).
(j) Share Purchase Agreement dated as of
July 2, 1993 between Baring Brothers (Guernsey) Limited and Others
and Arrow Electronics (UK) Limited (incorporated by reference to
Exhibit 10(l) to the company's Annual Report on Form 10-K for the
year ended December 31, 1993, Commission File No.1-4482).
(k) Share Sale Agreement dated as of August
17, 1993 between Ocean Information Holdings Limited and Arrow
Electronics, Inc. (incorporated by reference to Exhibit 10(m) to
the company's Annual Report on Form 10-K for the year ended
December 3, 1993, Commission File No. 1-4482.)
(l) Agreement and Plan of Merger, dated as
of June 24, 1994, by and among Arrow Electronics, Inc., AFG
Acquisition Company and Gates/FA Distributing, Inc. (incorporated
by reference to Exhibit 2 to the company's Registration Statement
on Form S-4, Commission File No. 35-54413).
(m) Agreement and Plan of Merger, dated as
of September 21, 1994, by and among Arrow Electronics, Inc., MTA
Acquisition Company and Anthem Electronics, Inc. (incorporated by
reference to Exhibit 2 to the company's Registration Statement on
Form S-4, Commission File No. 33-55645).
(3) (a) Amended and Restated Certificate of
Incorporation of the company, as amended.
(b) By-Laws of the company, as amended
(incorporated by reference to Exhibit 3(b) to the company's Annual
Report on Form 10-K for the year ended December 31, 1986,
Commission File No. 1-4482).
(4) (a) Indenture, including Debenture, dated
as of November 25, 1992 between the company and the Bank of
Montreal Trust Company, as Trustee, with respect to the company's
5-3/4% Convertible Subordinated Debentures due 2002 (incorporated
by reference to Exhibit 4(a) to the company's Annual Report on
Form 10-K for the year ended December 31, 1992, Commission File
No. 1-4482).
(b)(i) Rights Agreement dated as of March 2,
1988 between Arrow Electronics, Inc. and Manufacturers Hanover
Trust Company, as Rights Agent, which includes as Exhibit A a
38
Certificate of Amendment of the Restated Certificate of
Incorporation for Arrow Electronics, Inc. for the Participating
Preferred Stock, as Exhibit B a letter to shareholders describing
the Rights and a summary of the provisions of the Rights Agreement
and as Exhibit C the forms of Rights Certificate and Election to
Exercise (incorporated by reference to Exhibit 1 to the company's
Current Report on Form 8-K dated March 3, 1988, Commission File
No. 1-4482).
(ii) First Amendment, dated June 30, 1989,
to the Rights Agreement in (4)(b)(i) above (incorporated by
reference to Exhibit 4(b) to the Company's Current Report on Form
8-K dated June 30, 1989, Commission File No. 1-4482).
(iii) Second Amendment, dated June 8, 1991,
to the Rights Agreement in (4)(b)(i) above (incorporated by
reference to Exhibit 4(i)(iii) to the company's Annual Report on
Form 10-K for the year ended December 31, 1991, Commission File
No. 1-4482).
(iv) Third Amendment, dated July 19, 1991,
to the Rights Agreement in (4)(b)(i) above (incorporated by
reference to Exhibit 4(i)(iv) to the company's Annual Report on
Form 10-K for the year ended December 31, 1991, Commission File
No. 1-4482).
(v) Fourth Amendment, dated August 26,
1991, to the Rights Agreement in (4)(b)(i) above (incorporated by
reference to Exhibit 4(i)(v) to the company's Annual Report on
Form 10-K for the year ended December 31, 1991, Commission File
No. 1-4482).
(10)(a) Investment Management Agreement, dated
as of September 28, 1981, between the company and Fayez Sarofim &
Co. (incorporated by reference to Exhibit 10(b)(ii) to the
company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1981, Commission File No. 1-4482).
(b)(i) Arrow Electronics Savings Plan, as
amended and restated through January 1, 1989 (incorporated by
reference to Exhibit 10(b)(i) to the company's Annual Report on
Form 10-K for the year ended December 31, 1989, Commission File
No. 1-4482).
(ii) Amendment No. 1, dated December 7,
1989, to the Arrow Electronics Savings Plan in (10)(b)(i) above
(incorporated by reference to Exhibit 10(b)(ii) to the company's
Annual Report on Form 10-K for the year ended December 31, 1992,
Commission File No. 1-4482).
(iii) Amendment No. 2, dated January 18,
1990, to the Arrow Electronics Savings Plan in (10)(b)(i) above
(incorporated by reference to Exhibit 10(b)(ii) to the company's
Annual Report on Form 10-K for the year ended December 31, 1991,
Commission File No. 1-4482).
(iv) Amendment No. 3, dated February 21,
1992, to the Arrow Electronics Savings Plan in (10)(b)(i) above
(incorporated by reference to Exhibit 10(b)(iv) to the company's
Annual Report on Form 10-K for the year ended December 31, 1992,
Commission File No. 1-4482).
39
(v) Supplement, dated September 27, 1991,
to the Arrow Electronics Savings Plan in (10)(b)(i) above
(incorporated by reference to Exhibit 10(b)(v) to the company's
Annual Report on Form 10-K for the year ended December 31, 1992,
Commission File No. 1-4482).
(vi) Supplement No. 3, dated August 24,
1993, to the Arrow Electronics Savings Plan in 10(b)(i) above
(incorporated by reference to Exhibit 10(b)(vi) in the company's
Annual Report on Form 10-K for the year ended December 31, 1993,
Commission File No. 1-4482).
(vii) Supplement No. 4, dated December 28,
1994, to the Arrow Electronics Savings Plan in 10(b)(i) above.
(viii) Arrow Electronics Stock Ownership Plan,
as amended and restated through January 1, 1989 (incorporated by
reference to Exhibit 10(b)(ii) to the company's Annual Report on
Form 10-K for the year ended December 31, 1989, Commission File
No. 1-4482).
(ix) Amendment No. 1, dated November 29,
1989, to the Arrow Electronics Stock Ownership Plan in
(10)(b)(viii) above (incorporated by reference to Exhibit
10(b)(vii) to the company's Annual Report on Form 10-K for the
year ended December 31, 1992, Commission File No. 1-4482).
(x) Amendment No. 2, dated December 7,
1989, to the Arrow Electronics Stock Ownership Plan in
(10)(b)(viii) above (incorporated by reference to Exhibit
10(b)(viii) to the company's Annual Report on Form 10-K for the
year ended December 31, 1992, Commission File No. 1-4482).
(xi) Amendment No. 3, dated January 18,
1990, to the Arrow Electronics Stock Ownership Plan in
(10)(b)(viii) above (incorporated by reference to Exhibit
10(b)(iv) to the company's Annual Report on Form 10-K for the year
ended December 31, 1991, Commission File No. 1-4482).
(xii) Amendment No. 4, dated December 31,
1992 to the Arrow Electronics Stock Ownership Plan in
(10)(b)(viii) above (incorporated by reference to Exhibit 10(b)(x)
to the company's Annual Report on Form 10-K for the year ended
December 31, 1992, Commission File No. 1-4482).
(xiii) Supplement No. 1, dated September 8,
1992, to the Arrow Electronics Stock Ownership Plan in
(10)(b)(viii) above (incorporated by reference to Exhibit
10(b)(xi) to the company's Annual Report on Form 10-K for the year
ended December 31, 1992, Commission File No. 1-4482).
(xiv) Supplement No. 3, dated August 24,
1993, to the Arrow Electronics Stock Ownership Plan in
(10)(b)(viii) above incorporated by reference to Exhibit
10(b)(xiii) in the company's Annual Report on Form 10-K for the
year ended December 21, 1993, Commission File No. 1-4482).
(xv) Supplement to No. 4, dated December
28, 1994, to the Arrow Electronics Stock Ownership Plan in
(10)(b)(viii) above.
40
(xvi) Capstone Electronics Corp. Profit-
Sharing Plan, effective January 1, 1990 (incorporated by reference
to Exhibit 10(b)(iii) to the company's Annual Report on Form 10-K
for the year ended December 31, 1990, Commission File No. 1-4482).
(xvii) Supplement No. 1, dated September 8,
1992, to the Capstone Electronics Profit-Sharing Plan in
(10)(b)(xiv) above (incorporated by reference to Exhibit
10(b)(xvi) to the company's Annual Report on Form 10-K for the
year ended December 31, 1992, Commission File No. 1-4482).
(xviii) Supplement No. 2, dated August 24,
1993, to the Capstone Electronics Profit Sharing Plan in
(10)(b)(xvi) above (incorporated by reference to Exhibit
10(b)(xvi) in the company's annual Report on Form 10-K for the
year ended December 31, 1993, Commission File No. 1-4482).
(xix) Supplement No. 3, dated December 28,
1994 to Capstone Electronics Profit Sharing Plan in 10(b)(xvi)
above.
(c)(i) Employment Agreement, dated as of
October 16, 1990, between the company and John C. Waddell
(incorporated by reference to Exhibit 10(c)(i) to the company's
Annual Report on Form 10-K for the year ended December 31, 1990,
Commission File No. 1-4482).
(ii) Employment Agreement, dated as of
February 22, 1995, between the company and Stephen P. Kaufman.
(iii) Employment Agreement, dated as of March
13, 1991, between the company and Robert E. Klatell (incorporated
by reference to Exhibit 10(c)(iii) to the company's Annual Report
on Form 10-K for the year ended December 31, 1990, Commission File
No. 1-4482).
(iv) Form of agreement between the company
and the employees parties to the Employment Agreements listed in
10(c)(i), (ii), and (iii) above providing extended separation
benefits under certain circumstances (incorporated by reference to
Exhibit 10(c)(iv) to the company's Annual Report on Form 10-K for
the year ended December 31, 1988, Commission File No. 1-4482).
(v) Form of Employment Agreement, dated as
of September 1, 1994 between the company and Steven W. Menefee.
(vi) Form of Employment Agreement, as
amended and restated as of January 1, 1990, between the company
and Wesley S. Sagawa (incorporated by reference to Exhibit
10(c)(vi) to the company's Annual Report on Form 10-K for the year
ended December 31, 1989, Commission File No. 1-4482).
(vii) Employment Agreement, dated as of March
17, 1993, between the company and Jan Salsgiver (incorporated by
reference to Exhibit 10(c)(xii) to the company's Annual Report on
Form 10-K for the year ended December 3, 1993, Commission File No.
1-4482).
(viii) Form of Employment Agreement, dated as
of August 29, 1994, between the company and Philip D. Ellett.
41
(ix) Form of Employment Agreement, dated as
of September 21, 1994, between the company and John J. Powers,
III.
(x) Form of Employment Agreement, dated as
of September 21, 1994, between the company and Robert S. Throop.
(xi) Form of agreement between the company
and all corporate Vice Presidents, including the employees parties
to the Employment Agreements listed in 10(c)(v)-(x) above,
providing extended separation benefits under certain circumstances
(incorporated by reference to Exhibit 10(c)(ix) to the company's
Annual Report on Form 10-K for the year ended December 31, 1988,
Commission File No. 1-4482).
(xii) Form of agreement between the company
and non-corporate officers providing extended separation benefits
under certain circumstances (incorporated by reference to Exhibit
10(c)(x) to the company's Annual Report on Form 10-K for the year
ended December 31, 1988, Commission File No. 1-4482).
(xiii) Unfunded Pension Plan for Selected
Executives of Arrow Electronics, Inc., as amended.
(xiv) English translation of the Service
Agreement, dated January 19, 1993, between Spoerle Electronic and
Carlo Giersch (incorporated by reference to Exhibit 10(f)(v) to
the company's Annual Report on Form 10-K for the year ended
December 31, 1992, Commission File No. 1-4482).
(d)(i) Senior Note Purchase Agreement, dated
as of December 29,1992, with respect to the company's 8.29% Senior
Secured Notes due 2000 (incorporated by reference to Exhibit 10(d)
to the company's Annual Report on Form 10-K for the year ended
December 31, 1992, Commission File No. 1-4482).
(ii) First Amendment, dated as of December
22, 1993, to the Senior Note Purchase Agreement in 10(d)(i) above
(incorporated by reference to Exhibit 10(d)(ii) in the company's
Annual Report on form 10-K for the year ended December 31, 1993,
Commission File No. 1-4482).
(e) Amended and Restated Credit Agreement,
dated as of January 28, 1994 among Arrow Electronics, Inc., the
several Banks from time to time parties hereto, Bankers Trust
Company and Chemical Bank, as agents (incorporated by reference to
Exhibit 10(e) to the company's Annual Report on Form 10-K for the
year ended December 31, 1993, Commission File No. 1-4482).
(f)(i) English translation of the Agreement of
Purchase and Sale, dated January 19, 1993, between Carlo Giersch
and Arrow Electronics GmbH with respect to the purchase of an
additional 15% interest in Spoerle Electronic (incorporated by
reference to Exhibit 10(f)(i) to the company's Annual Report on
Form 10-K for the year ended December 31, 1992, Commission File
No. 1-4482).
42
(ii) English translation of the Offer
Agreement, with supplemental letters attached, dated January 19,
1993, between Arrow Electronics GmbH and Carlo Giersch with
respect to the purchase of a second 15% interest in Spoerle
Electronic (incorporated by reference to Exhibit 10(f)(ii) to the
company's Annual Report on Form 10-K for the year ended December
31, 1992, Commission File No. 1-4482).
(iii) English translation of the Partnership
Agreement of Spoerle Electronic, dated January 19, 1993
(incorporated by reference to Exhibit 10(f)(iii) to the company's
Annual Report on Form 10-K for the year ended December 31, 1992,
Commission File No. 1-4482).
(iv) English translation of the Articles of
Spoerle GmbH, dated as of January 1, 1993 (incorporated by
reference to Exhibit 10(f)(iv) to the company's Annual Report on
Form 10-K for the year ended December 31, 1992, Commission File
No. 1-4482).
(g) Amendment and Restatement Agreement
relating to a Facilities Agreement dated February 28, 1992,
between Arrow Electronics (UK) Limited and National Westminster
Bank PLC.
(h)(i) Credit Agreement, dated April 14, 1993,
between Berliner Handels- und Frankfurter Bank and Arrow
Electronics GmbH (incorporated by reference to Exhibit 10(h)(i) in
the company's Annual Report on Form 10-K for the year ended
December 31, 1993, Commission File No. 1-4482).
(ii) Amendment, dated January 28, 1994, to
the Credit Agreement in (10)(h)(i) above (incorporated by
reference to Exhibit 10(h)(ii) in the company's Annual Report on
Form 10-K for the year ended December 31, 1993, Commission File
No. 1-4482).
(iii) Guarantee, dated January 16, 1990,
between Arrow Electronics, Inc. and Berliner Handels- und
Frankfurter Bank (incorporated by reference to Exhibit 10(h)(ii)
to the company's Annual Report on Form 10-K for the year ended
December 31, 1989, Commission File No. 1-4482).
(iv) Subordination Agreement, dated January
16, 1990, between Berliner Handels- und Frankfurter Bank, Arrow
Electronics, Inc., and The First National Bank of Chicago
(incorporated by reference to Exhibit 10(h)(iii) to the company's
Annual Report on Form 10-K for the year ended December 31, 1989,
Commission File No. 1-4482).
(v) First Amendment, dated December 29,
1992, to the Subordination Agreement in (10)(h)(iv) above
(incorporated by reference to Exhibit 10(h)(iv) to the company's
Annual Report on Form 10-K for the year ended December 31, 1992,
Commission File No. 1-4482).
43
(vi) Second Amendment, dated January 26,
1993, to the Subordination Agreement in (10)(h)(iv) above
(incorporated by reference to Exhibit 10(h)(v) to the company's
Annual Report on Form 10-K for the year ended December 31, 1992,
Commission File No. 1-4482).
(vii) Third Amendment, dated April 12, 1993,
to the Subordination Agreement in (10)(h)(iv) above (incorporated
by reference to Exhibit 10(h)(vii) in the company's annual Report
on Form 10-K for the year ended December 31, 1993, Commission File
No. 1-4482).
(viii) Fourth Amendment, dated January 28,
1994, to the Subordination Agreement in (10)(h)(iv) above
(incorporated by reference to Exhibit 10(h)(viii) to the company's
Annual Report on Form 10-K for the year ended December 31, 1993,
Commission File No. 1-4482).
(viv) Assignments, dated January 16, 1990, by
Arrow Electronics GmbH in favor of Berliner Handels-und
Frankfurter Bank (incorporated by reference to Exhibit 10(h)(iv)
to the company's Annual Report on Form 10-K for the year ended
December 31, 1989, Commission File No. 1-4482).
(i)(i) Arrow Electronics, Inc. Stock Option
Plan, as amended.
(ii) Form of Stock Option Agreement under
(i)(i) above (incorporated by reference to Exhibit 10(k)(ii) to
the company's Annual Report on Form 10-K for the year ended
December 31, 1986, Commission File No. 1-4482).
(iii) Form of Nonqualified Stock Option
Agreement under (i)(i) above (incorporated by reference to Exhibit
10(k)(iv) to the company's Registration Statement on Form S-4,
Registration No. 33-17942).
(j)(i) Restricted Stock Plan of Arrow
Electronics, Inc., as amended and restated.
(ii) Form of Award Agreement under (j)(i)
above (incorporated by reference to Exhibit 10(l)(iv) to the
company's Registration Statement on Form S-4, Registration No.
33-17942).
(k) Form of Indemnification Agreement
between the company and each director (incorporated by reference
to Exhibit 10(m) to the company's Annual Report on Form 10-K for
the year ended December 31, 1986, Commission File No. 1-4482).
(11) Statement Re: Computation of Earnings
Per Share.
(22) List of Subsidiaries.
(24) Consent of Ernst & Young
(28) (i) Record of Decision, issued by the EPA
on September 28, 1990, with respect to environmental clean-up in
Plant City, Florida (incorporated by reference to Exhibit 28 to
44
the company's Annual Report on Form 10-K for the year ended
December 31, 1990, Commission File No. 1-4482).
(ii) Consent Decree lodged with the U.S.
District Court for the Middle District of Florida, Tampa Division,
on December 18, 1991, with respect to environmental clean-up in
Plant City, Florida (incorporated by reference to Exhibit 28(ii)
to the company's Annual Report on Form 10-K for the year ended
December 31, 1991, Commission File No. 1-4482).
(b) Reports on Form 8-K
During the quarter ending December 31, 1994, the following
Current Reports on Form 8-K were filed:
Date of Report
(Date of Earliest Event Reported) Items Reported
December 7, 1994 Item 2
45
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registra-
tion Statements (Forms S-8 No. 33-55565, 33-66594, No. 33-48252,
No. 33-20428 and No. 2-78185) and in the related Prospectuses
pertaining to the employee stock plans of Arrow Electronics, Inc.,
in Amendment No. 1 to the Registration Statement (Form S-3 No. 33-
54473) and in the related Prospectus pertaining to the
registration of 1,376,843 shares of Arrow Electronics, Inc. common
stock, in Amendment No. 1 to the Registration Statement (Form S-3
No. 33-67890) and in the related Prospectus pertaining to the
registration of 1,009,086 shares of Arrow Electronics, Inc. Common
Stock, and in Amendment No. 1 to the Registration Statement (Form
S-3 No. 33-42176) and in the related Prospectus pertaining to the
registration of up to 944,445 shares of Arrow Electronics, Inc.
Common Stock held by Aquarius Investments Ltd. and Andromeda
Investments Ltd. of our report dated February 22, 1995 with
respect to the consolidated financial statements and schedules of
Arrow Electronics, Inc. included in this Annual Report on Form 10-
K for the year ended December 31, 1994.
ERNST & YOUNG LLP
New York, New York
March 27, 1995
46
<TABLE>
ARROW ELECTRONICS, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
For the three years ended December 31, 1994
<CAPTION>
Additions
Balance at Balance
beginning Charged Charged at end
of year to income to other Write-offs of year
Allowance for
doubtful accounts(1)
<S> <C> <C> <C> <C> <C>
1994 $24,263,000 $20,289,000 $3,251,000(2) $16,671,000 $31,132,000
1993 $16,278,000 $17,330,000 $3,060,000(3) $12,405,000 $24,263,000
1992 $14,489,000 $16,596,000 $1,288,000(4) $16,095,000 $16,278,000
(1) The company acquired Gates/FA Distributing, Inc. and Anthem Electronics, Inc. in
transactions accounted for as poolings of interests, accordingly all financial
information has been restated to include the accounts of the acquired companies for all
periods presented.
(2) Represents the allowance for doubtful accounts of the electronics distribution
businesses acquired by the company in 1994 including the Megachip Group, Field Oy, TH:s
Elektronik AB, Exatec A/S, Texny Glorytact (HK) Limited, Veltek Australia Pty Ltd.,
Zatek Australia Pty Ltd., and Silverstar Ltd. S.p.A.
(3) Represents the allowance for doubtful accounts of the electronics distribution
businesses acquired by the company in 1993 including Zeus Components, Inc.,
Microprocessor & Memory Distribution Limited, Amitron-Arrow S.A., ATD Electronica S.A.,
CCI Electronique S.A., and Spoerle Electronic.
(4) Represents the allowance for doubtful accounts of the European electronics distribution
businesses acquired from Lex Service PLC in 1992.
</TABLE>
47
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this annual report to be
signed on its behalf by the undersigned, thereunto duly authorized.
ARROW ELECTRONICS, INC.
By/s/ Robert E. Klatell
Robert E. Klatell
Senior Vice President
March 29, 1995
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated:
By/s/ Stephen P. Kaufman March 29, 1995
Stephen P. Kaufman, Chairman, Principal
Executive Officer, and Director
By/s/ Robert E. Klatell March 29, 1995
Robert E. Klatell, Senior Vice President,
Principal Financial Officer, and Director
By/s/ Paul J. Reilly March 29, 1995
Paul J. Reilly, Controller
and Principal Accounting Officer
By/s/ Daniel W. Duval March 29, 1995
Daniel W. Duval, Director
By/s/ Carlo Giersch March 29, 1995
Carlo Giersch, Director
By/s/ J. Spencer Gould March 29, 1995
J. Spencer Gould, Director
By/s/ Lawrence R. Kem March 29, 1995
Lawrence R. Kem, Director
By/s/ Steven W. Menefee March 29, 1995
Steven W. Menefee, Director
By/s/ Karen Gordon Mills March 29, 1995
Karen Gordon Mills, Director
By/s/ Anne Pol March 29, 1995
Anne Pol, Director
By/s/ Richard S. Rosenbloom March 29, 1995
Richard S. Rosenbloom, Director
By/s/ Robert S. Throop March 29, 1995
Robert S. Throop, Director
By/s/ John C. Waddell March 29, 1995
John C. Waddell, Vice Chairman
48
RESTATED CERTIFICATE OF INCORPORATION
OF
ARROW ELECTRONICS, INC.
Under Section 807 of the Business Corporation Law
1. The name of the Corporation is ARROW
ELECTRONICS, INC.
2. The date of filing of the Certificate of
Incorporation of the Corporation in the office of the
Department of State is November 20, 1946.
3. The text of the certificate of incorporation
hereby is restated without amendment or change to read as
follows:
FIRST: The name of the Corporation is ARROW
ELECTRONICS, INC.
SECOND: The purposes for which this Corporation
is formed are as follows:
To design, patent, manufacture, fabricate, buy,
sell, distribute, import, export, and generally deal
in electrical devices, wireless telegraph and
telephone instruments, sets, apparatus and parts
thereof, radio transmitting and receiving instruments,
sets, apparatus and parts thereof, electronic devices,
instruments, sets, apparatus and parts thereof, as
well as television instruments, sets, apparatus and
parts thereof.
To buy, sell and trade in all machinery, supplies
and merchandise, and to do any and every act or thing
that may be appurtenant, incidental to or necessary in
connection with the foregoing purposes.
To take, buy, exchange, lease or otherwise
acquire real estate and any interest or right therein,
and to hold, own, operate, control, maintain, manage
and develop the same and to construct, maintain,
alter, manage and control directly or through
ownership of stock in any other corporation any and
all kinds of buildings, stores, offices, warehouses,
mills, shops, factories, machinery and plants, and any
and all other structures and erections which may at
any time be necessary, useful or advantageous for the
purposes of this Corporation.
To sell, assign and transfer, convey, lease or
otherwise alienate or dispose of, and to mortgage or
otherwise encumber the lands, buildings, real and
personal property of the Corporation wherever
situated, and any and all legal and equitable
interests therein.
To purchase, sell, lease, manufacture, deal in
and deal with every kind of goods, wares and
merchandise, and every kind of personal property,
including patents and patent rights, chattels,
easements, privileges and franchises which may
lawfully be purchased, sold, produced, or dealt in by
corporations formed under Article Two of the Stock
Corporation Law of the State of New York.
To purchase, acquire, hold and dispose of the
stocks, bonds and other evidences of indebtedness of
any corporation, domestic or foreign, and to issue in
exchange therefor its stocks, bonds or other
obligations, and to exercise in respect thereof all
the rights, powers and privileges of individual
owners, including the right to vote thereon; and to
aid in any manner permitted by law any corporation of
which any bonds or other securities or evidences of
indebtedness or stocks are held by this corporation,
and to do any acts or things designed to protect,
preserve, improve or enhance the value of any such
bonds or other securities or evidence of indebtedness
of stock.
The foregoing and the following clauses shall be
construed as objects and powers in furtherance and not
in limitation of the general powers conferred by the
laws of the State of New York; and it is hereby
expressly provided that the foregoing and the
following enumeration of specific powers shall not be
held to limit or restrict in any manner the powers of
this Corporation, and that this Corporation may do all
and everything necessary, suitable or proper for the
accomplishment of any of the purposes or objects
hereinabove enumerated either alone or in association
with other corporations, firms or individuals, to the
same extent and as fully as individuals might or could
do as principals, agents, contractors or otherwise.
Nothing in this certificate contained, however,
shall authorize the Corporation to carry on any
business or exercise any powers in any state or county
which a similar corporation organized under the laws
of such state or country could not carry on or
exercise; or to engage within or without the State of
New York in the business of a lighting or a
transportation corporation, or in the common carrier
business, or to issue bills, notes or other evidence
of debt for circulation of money.
THIRD: The total number of shares of all
classes of stock which the Corporation shall have authority
to issue is Eighty-Two Million (82,000,000) shares,
consisting of:
(a) Two Million (2,000,000) shares of Preferred
Stock having a par value of $1 per share (hereinafter
referred to as "Preferred Stock"); and
(b) Eighty Million (80,000,000) shares of Common
Stock having a par value of $1 per share (hereinafter
referred to as "Common Stock").
A. Preferred Stock:
Shares of Preferred Stock may be issued from time
to time in one or more series, as may from time to time be
determined by the Board of Directors, each of said series
to be distinctly designated. All shares of any one series
of Preferred Stock shall be alike in every particular,
except that there may be different dates from which
dividends, if any, thereon shall be cumulative, if made
cumulative. The voting powers and the preferences and
relative, participating, optional and other special rights
or each such series, and the qualifications, limitations or
restrictions thereof, if any, may differ from those of any
and all other series at any time outstanding; and, subject
to the provisions of subparagraph 1 of Paragraph C of this
Article THIRD, the Board of Directors of the Corporation is
hereby expressly granted authority to fix by resolution or
resolutions adopted prior to the issuance of any shares of
a particular series of Preferred Stock, the voting powers
and the designations, preferences and relative, optional
and other special rights and the qualifications,
limitations and restrictions of such series, including, but
without limiting the generality of the foregoing, the
following:
(a) The distinctive designation of, and the
number of shares of Preferred Stock which shall constitute
such series, which number may be increased (except where
otherwise provided by the Board of Directors) or decreased
(but not below the number of shares thereof then
outstanding) from time to time by like action of the Board
of Directors;
(b) The rate and times at which, and the terms
and conditions on which, dividends, if any, on Preferred
Stock of such series shall be paid, the extent of the
preference or relation, if any, of such dividends to the
dividends payable on any other class or classes, or series
of the same or other classes of stock and whether such
dividends shall be cumulative or non-cumulative;
(c) The right, if any, of the holders of
Preferred Stock of such series to convert the same into, or
exchange the same for, shares of any other class or classes
or of any series of the same or any other class or classes
of stock of the Corporation and the terms and conditions of
such conversion or exchange;
(d) Whether or not Preferred Stock of such
series shall be subject to redemption, and the redemption
price or prices and the time or times at which, and the
terms and conditions on which Preferred Stock of such
series may be redeemed;
(e) The rights, if any, of the holders of
Preferred Stock of such series upon the voluntary or
involuntary liquidation, merger, consolidation,
distribution or sale of assets, dissolution or winding-up,
of the Corporation;
(f) The terms of the sinking fund or redemption
or purchase account, if any, to be provided for the
Preferred Stock of such series; and
(g) The voting powers, if any, of the holders of
such series of Preferred Stock which may, without limiting
the generality of the foregoing, include the right, voting
as a series by itself or together with other series of
Preferred Stock or all series of Preferred Stock as a
class, to elect one or more directors of the Corporation if
there shall have been a default in the payment of dividends
on any one or more series of Preferred Stock or under such
other circumstances and on such conditions as the Board of
Directors may determine; provided, however, that each
holder of Preferred Stock shall have no more than one vote
in respect of each share of Preferred Stock held by him on
any matter voted upon by the shareholder.
B. Common Stock
1. After the requirements with respect to
preferential dividends on the Preferred Stock (fixed in
accordance with the provisions of Paragraph A of this
Article THIRD), if any, shall have been met and after the
Corporation shall have complied with all the requirements,
if any, with respect to the setting aside of sums as
sinking funds or redemption or purchase accounts (fixed in
accordance with the provisions of Paragraph A of this
Article THIRD), and subject further to any other conditions
which may be fixed in accordance with the provisions of
Paragraph A of this Article THIRD, then and not otherwise
the holders of Common Stock shall be entitled to receive
such dividends as may be declared from time to time by the
Board of Directors.
2. After distribution, in full of the
preferential amount, if any (fixed in accordance with the
provisions of Paragraph A of this Article THIRD), to be
distributed to the holders of Preferred Stock in the event
of voluntary or involuntary liquidation, distribution or
sale of assets, dissolution or winding-up, of the
Corporation, the holders of the Common stock shall be
entitled to receive all the remaining assets of the
Corporation, tangible and intangible, of whatever kind
available for distribution to shareholders ratably in
proportion to the number of shares of Common Stock held by
them respectively.
3. Except as may otherwise be required by law
or by the provisions of such resolution or resolutions as
may be adopted by the Board of Directors pursuant to
Paragraph A of this Article THIRD, each holder of Common
Stock shall have one vote in respect of each share of
Common Stock held by him on all matters voted upon by the
shareholders.
C. Other Provisions:
1. No holder of any of the shares of any class
or series of stock or of options, warrants or other rights
to purchase shares of any class or series of stock or of
other securities of the Corporation shall have any
preemptive right to purchase or subscribe for any unissued
stock of any class or series or any additional shares of
any class or series to be issued by reason of any increase
of the authorized capital stock of the Corporation of any
class or series, or bonds, certificates of indebtedness,
debentures or other securities convertible into or
exchangeable for stock of the Corporation of any class or
series, or carrying any right to purchase stock of any
class or series, but any such unissued stock, additional
authorized issue of shares of any class or series of stock
or securities convertible into or exchangeable for stock,
or carrying any right to purchase stock, may be issued and
disposed of pursuant to resolution of the Board of
Directors to such persons, firms, corporations or
associations, whether such holders or others, and upon such
terms as may be deemed advisable by the Board of Directors
in the exercise of its sole discretion.
2. The relative powers, preferences and rights
of each series of Preferred Stock in relation to the
powers, preferences and rights of each other series of
Preferred Stock shall, in each case be as fixed from time
to time by the Board of Directors in the resolution or
resolutions adopted pursuant to authority granted in
Paragraph A of this Article THIRD and the consent, by class
or series vote or otherwise, of the holders of such of the
series of Preferred Stock as are from time to time
outstanding shall not be required for the issuance by the
Board of Directors of any other series of Preferred Stock
whether or not the powers, preferences and rights of such
other series shall be fixed by the Board of Directors as
senior to, or on a parity with, the powers, preferences and
rights of such outstanding series, or any of them;
provided, however, that the Board of Directors may provide
in the resolution or resolutions as to any series of
Preferred Stock adopted pursuant to Paragraph A of this
Article THIRD that the consent of the holders of a majority
(or such greater proportion as shall be therein fixed) of
the outstanding shares of such series voting thereon shall
be required for the issuance of any or all other series of
Preferred Stock.
3. Subject to the provisions of subparagraph 2
of this Paragraph C, shares of any series of Preferred
Stock may be issued from time to time as the Board of
Directors of the Corporation shall determine and on such
terms and for such consideration as shall be fixed by the
Board of Directors.
4. Shares of Common Stock may be issued from
time to time as the Board of Directors of the Corporation
shall determine and on such terms and for such
consideration as shall be fixed by the Board of Directors.
5. The authorized amount of shares of Common
Stock and of Preferred Stock may, without a class or series
vote, be increased or decreased from time to time by the
affirmative vote of the holders of a majority of the stock
of the Corporation entitled to vote thereon.
D. The voting powers and the designations,
preferences and relative, optimal and other special rights
and the qualifications, limitations and restrictions of the
$19.375 Convertible Exchangeable Preferred Stock are as
follows:
(A) DESIGNATION AND SIZE OF ISSUE
The distinctive designation of the series shall
be "$19.375 Convertible Exchangeable Preferred Stock"
(hereinafter referred to as this "Series"). The number of
shares which shall constitute this Series shall be 280,000
shares. Each share of this Series shall have a par value
of $1.00.
(B) DIVIDENDS
(1) The annual rate of dividends payable on each
share of this Series shall be $19.375.
(2) Dividends shall be payable in cash,
quarterly on the first day of February, May, August and
November of each year, commencing August 1, 1986 (each such
date hereinafter referred to as a "Dividend Payment Date"),
except that if such date is not a Business Day (as
hereinafter defined), then such dividend shall be payable
on the next succeeding calendar day which is a Business
Day. The amount of dividends payable on shares of this
Series for each full quarterly dividend period shall be
computed by dividing by four the annual rate per share set
forth in Section (B)(1). Dividends payable on shares of
this Series for the initial dividend period and for any
period less than a full quarterly period shall be computed
on the basis of a 360-day year of twelve 30-day months.
Dividends shall be payable to the record holders of shares
of this Series as of the close of business on a date, not
more than sixty (60) days preceding the payment date
thereof, fixed by the Board of Directors of the
Corporation. Dividends in arrears may be declared and paid
at any time, without reference to any regular Dividend
Payment Date, to record holders of Shares of this Series as
of the close of business on a date, not more than sixty
(60) days preceding the payment date thereof, fixed by the
Board of Directors of the Corporation. As used in this
Paragraph D, the term "Business Day" means a day other than
Saturday or Sunday and other than a day on which banking
institutions in New York, New York are authorized by law or
executive order to close.
(3) Dividends payable on shares of this Series
shall be cumulative and shall accumulate on each Dividend
Payment Date from the date of original issue. Accumulation
of dividends shall not bear interest.
(4) Except as hereinafter provided, so long as
any shares of this Series are outstanding, no dividend
(other than a dividend in Common Stock or in any other
stock of the Corporation ranking junior to this Series as
to dividends and upon liquidation (collectively, the
"Junior Stock")) shall be declared or paid or set aside for
payment, and no other distribution shall be declared or
made, upon the Junior Stock or upon any other stock of the
Corporation ranking on a parity with this Series as to
dividends or upon liquidation, nor shall any Junior Stock
nor any other stock of the Corporation ranking on a parity
with this Series as to dividends or upon liquidation be
redeemed, purchased or otherwise acquired for any
consideration (or any monies be paid to or made available
for a sinking fund for the redemption of any shares of any
such stock) by the Corporation (except by conversion into
or exchange for Junior Stock of the Corporation), unless,
in each case, the full cumulative dividends on all
outstanding shares of this Series shall have been paid or
contemporaneously are declared and paid through the last
Dividend Payment Date. When dividends are not paid in full
upon the shares of this Series and any other stock of the
Corporation ranking on a parity as to dividends with this
Series, all dividends declared upon shares of this Series
and any stock of the Corporation ranking on a parity as to
dividends with this Series shall be declared pro rata so
that the amount of dividends declared per share on this
Series and such other stock shall in all cases bear to each
other the same ratio that accrued dividends per share on
the shares of this Series and such other stock bear to each
other. Holders of shares of this Series shall not be
entitled to any dividends, whether payable in cash,
property or stock, in excess of full cumulative dividends,
as herein provided, on this Series. No interest, or sum of
money in lieu of interest, shall be payable in respect of
any dividend payment or payments on this Series which may
be in arrears.
(C) REDEMPTION
(1) The Corporation, at the option of the Board
of Directors, may, subject to the provisions of Section
(B)(4), (C)(2) and (C)(8) hereof, redeem at any time or
from time to time all or any part of the outstanding shares
of this Series. The redemption price for each share of
this Series called for redemption during the periods set
forth below shall be the amount set forth opposite such
period.
<TABLE>
<CAPTION>
If Redeemed During
the Twelve-Month Redemption
Period Beginning May, 1 Price Per Share
<C> <C>
1986 $269.40
1987 $267.40
1988 $265.50
1989 $263.60
1990 $261.60
1991 $259.70
1992 $257.80
1993 $255.80
1994 $253.90
1995 $251.90
</TABLE>
and $250 if redeemed on or after May 1, 1996 together in
each case with accumulated and unpaid dividends to the date
fixed for redemption.
(2) Notwithstanding the provisions of Section
(C)(1) above, the Corporation may not redeem any shares of
this Series prior to May 1, 1988 unless the Closing Price
(as determined in Section (C)(3)) of the Corporation's
Common Stock shall have equaled or exceeded 150% of the
then applicable conversion price per share (as fixed or
determined in accordance with Section (D)) for at least
twenty (20) Trading Days (as hereinafter defined) within
thirty (30) consecutive Trading Days ending within five
Trading Days prior to the date notice of redemption is
given. For purposes of this Paragraph D, Trading Day
means, so long as the Common Stock is listed or admitted to
trading on the New York Stock Exchange (or any successor to
such Exchange), a day on which the New York Stock Exchange
(or such successor) is open for the transaction of
business, or, if the Common Stock is not listed or admitted
to trading on such Exchange, a day on which the principal
national securities exchange on which the Common Stock is
listed is open for the transaction of business, or, if the
Common Stock is not listed or admitted to trading on any
national securities exchange, a day on which any New York
Stock Exchange member firm is open for the transaction of
business.
(3) For purposes of this Paragraph D, the
Closing Price of the Corporation's Common Stock shall be
the last sale price as shown on the Composite Tape of the
New York Stock Exchange, or, in the case no such sale takes
place on such day, the average of the closing bid and asked
prices on the New York Stock Exchange, or, if the Common
Stock is not listed or admitted to trading on such
Exchange, on the principal national securities exchange on
which the Common Stock is listed or admitted to trading,
or, if it is not listed or admitted to trading on any
national securities exchange, the average of the closing
bid and asked prices as furnished by any New York Stock
Exchange member firm selected from time to time by the
Board of Directors of the Corporation for such purpose
(other than the Corporation or a subsidiary thereof).
(4) In the event that fewer than all the
outstanding shares of this Series are to be redeemed, the
number of shares to be redeemed shall be determined by the
Board of Directors, and the shares to be redeemed shall be
determined by lot or by any other method as may be
determined by the Board of Directors in its sole discretion
to be equitable.
(5) In the event the Corporation shall redeem
shares of this Series, notice of such redemption shall be
given by first class mail, postage prepaid, mailed not less
than thirty (30) nor more than sixty (60) days prior to the
redemption date, to each record holder of the shares to be
redeemed, at such holder's address as the same appears on
the books of the Corporation. Each such notice shall
state: (i) the redemption date; (ii) the total number of
shares of this Series to be redeemed and, if fewer than all
the shares held by such holder are to be redeemed, the
number of such shares to be redeemed from such holder;
(iii) the redemption price; (iv) the place or places where
certificates for cash shares are to be surrendered for
payment of the redemption price; (v) that dividends on the
shares to be redeemed will cease to accrue on such
redemption date; and (vi) the conversion rights of the
shares to be redeemed, the period within which conversion
rights may be exercised, and the conversion rate at the
time applicable.
(6) If notice shall have been given as provided
in Section (C)(5) and the Corporation shall have provided
moneys at the time and place specified for the payment of
the redemption price pursuant to such notice, then from and
after the redemption date, dividends on the shares of this
Series so called for redemption shall cease to accrue, such
shares shall no longer be deemed to be outstanding, and all
rights of the holders thereof as stockholders of the
Corporation (except the right to receive from the
Corporation the redemption price without interest) shall
cease. Upon surrender (in accordance with the notice) of
the certificates for any shares so redeemed (properly
endorsed or assigned for transfer, if the Board of
Directors of the Corporation shall so require and the
notice shall so state), such shares shall be redeemed by
the Corporation at the redemption price set forth in
Section (C)(1). In case fewer than all the shares
represented by any such certificate are to be redeemed, a
new certificate shall be issued representing the unredeemed
shares, without cost to the holder thereof.
(7) Any shares of this Series which have been
redeemed shall, after such redemption, have the status of
authorized but unissued shares of Preferred Stock, without
designation as to series, until such shares are once more
designated as part of a particular series by the Board of
Directors.
(8) Notwithstanding the foregoing provisions of
this Section (C), unless the full cumulative dividends on
all outstanding shares of this Series and any other
Preferred Stock ranking on a parity with this Series shall
have been paid or contemporaneously are declared and paid
through the last Dividend Payment Date, no shares of this
Series shall be redeemed, and the Corporation shall not
purchase or otherwise acquire any shares of this Series.
(D) CONVERSION RIGHTS
(1) Each holder of a share of this Series shall
have the right, at any time, or, as to any share of this
Series called for redemption or exchange, at any time prior
to the close of business on the date fixed for such
redemption or exchange, to convert such share into fully
paid and nonassessable shares of Common Stock of the
Corporation at a rate of 15.244 shares of Common Stock for
each share of this Series, subject to adjustment as
provided in this Section (D) (the "conversion rate"). For
purposes of this Paragraph D and the conversion of
Debentures referred to in Section (E), the relationship
between the "conversion rate" and the "conversion price"
per share of Common Stock shall be such that the conversion
price shall equal $250 divided by the conversion rate. The
initial conversion price shall be $16.40 per share of
Common Stock.
(2) If any shares of this Series are surrendered
for conversion subsequent to the record date preceding a
Dividend Payment Date but on or prior to such Dividend
Payment Date (except shares called for redemption on a
redemption date between such record date and Dividend
Payment Date), the registered holder of such shares at the
close of business on such record date shall be entitled to
receive the dividend payable on such shares on such
Dividend Payment Date notwithstanding the conversion
thereof. Shares of this Series surrendered for conversion
during the period from the close of business on any record
date for the payment of dividends next preceding any
Dividend Payment Date to the opening of business on such
Dividend Payment Date shall (except in the case of shares
which have been called for redemption on a redemption date
within such period) be accompanied by payment in New York
Clearing House funds or other funds acceptable to the
Corporation of an amount equal to the dividend payable on
such Dividend Payment Date on the share being surrendered
for conversion. Except as provided in this Section (D)(2),
no adjustments in respect of or payments of dividends on
shares surrendered for conversion or any dividend on the
Common Stock issued upon conversion shall be made upon the
conversion of any shares of this Series.
(3) The Corporation shall not be required, in
connection with any conversion of shares of this Series, to
issue a fraction of a share of its Common Stock, but in
lieu thereof the Corporation shall, subject to
Section (D)(6)(e), make a cash payment (calculated to the
nearest cent -- five mills being considered as nearer to
the next highest cent) equal to such fraction multiplied by
the Closing Price of the Common Stock on the last Trading
Day prior to the date of conversion.
(4) Any holder of shares of this Series electing
to convert such shares into Common Stock shall surrender
the certificate or certificates for such shares at the
office of the Transfer Agent therefor (or at such other
place as the Corporation may designate by notice to the
holders of shares of this Series) during regular business
hours, duly endorsed to the Corporation or in blank, or
accompanied by instruments of transfer to the Corporation
or in blank, in form satisfactory to the Corporation, and
shall give written notice to the Corporation at such office
that such holder elects to convert such shares of this
Series. The Corporation shall, as soon as practicable
(subject to Section (D)(6)(e) hereof) after such deposit of
certificates for shares of this Series, accompanied by the
written notice above prescribed and the payment of cash in
the amount required by Section (D)(2), issued and deliver
at such office to the holder for whose account such shares
were surrendered, or to his nominee, certificates
representing the number of shares of Common Stock and the
cash, if any, to which such holder is entitled upon such
conversion.
(5) Conversion shall be deemed to have been made
as of the date of surrender of certificates for the shares
of this Series, to be converted, and the giving of written
notice and payment, as prescribed in Section (D)(2) and
(D)(4); and the person entitled to receive the Common Stock
issuable upon such conversion shall be treated for all
purposes as the record holder of such Common Stock on such
date. The Corporation shall not be required to deliver
certificates for shares of its Common Stock while the stock
transfer books for such stock or for this Series are duly
closed for any purpose, but certificates for shares of
Common Stock shall be issued and delivered as soon as
practicable after the opening of such books.
(6) The conversion rate shall be adjusted from
time to time as follows:
(a) In case the Corporation shall, at any time
or from time to time while any of the Stock is outstanding,
(i) pay a dividend in shares of its Common Stock, (ii)
subdivide its outstanding shares of Common Stock, (iii)
combine its outstanding shares of Common Stock into a
smaller number of shares, or (iv) issue by reclassification
of its shares of Common Stock any shares of stock of the
Corporation, the conversion price and the conversion rate
in effect immediately prior to such action shall be
adjusted so that the holder of any shares of this Series
thereafter surrendered for conversion shall be entitled to
receive the number of shares of capital stock of the
Corporation which such holder would have owned or have been
entitled to receive immediately following such action had
such shares of this Series been converted immediately prior
thereto. An adjustment made pursuant to this Section
(D)(6)(a) shall become effective retroactively to
immediately after the opening of business on the day
following the record date in the case of a dividend or
distribution and shall become effective immediately after
the opening of business on the day following the effective
date in the case of subdivision, combination or
reclassification. If, as a result of an adjustment made
pursuant to this Section (D)(6)(a), the holder of any
shares of this Series thereafter surrendered for conversion
shall become entitled to receive shares of two or more
classes of capital stock of the Corporation, the Board of
Directors (whose determination shall be conclusive) shall
determine the allocation of the adjusted conversion price
and/or conversion rate between or among shares of such
classes of capital stock.
(b) In case the Corporation shall, at any time
or from time to time while any of the Stock is outstanding,
issue rights or warrants to all holders of shares of its
Common Stock entitling them to subscribe for or purchase
shares of Common Stock at a price per share less than the
current market price per share of Common Stock (as defined
in Section (D)(6)(d), at such record date, the conversion
rate shall be adjusted so that it shall equal the rate
determined by multiplying the conversion rate in effect
immediately prior to the date of issuance of such rights or
warrants by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding on the date of
issuance of such rights or warrants plus the number of
additional shares of Common Stock offered for subscription
or purchase, and the denominator of which shall be the
number of shares of Common Stock outstanding on the date of
issuance of such rights or warrants plus the number of
shares which the aggregate offering price of the total
number of shares so offered would purchase at such current
market price. Such adjustment shall become effective
retroactively immediately after the record date for the
determination of stockholders entitled to receive such
rights or warrants.
(c) In case the Corporation shall, at any time
or from time to time while any of the Stock is outstanding,
distribute to all holders shares of its Common Stock,
evidences of its indebtedness or securities or assets
(excluding cash distributions payable out of consolidated
earnings or retained earnings, or dividends payable in
shares of Common Stock) or rights to subscribe (excluding
those referred to in (b)), then in each such case the
conversion rate shall be adjusted so that it shall equal
the rate determined by multiplying the conversion rate in
effect immediately prior to the date of such distribution
by a fraction, the numerator or which shall be the current
market price per share (determined as provided in Section
(D)(6)(d)) of the Common Stock on the record date referred
to below, and the denominator of which shall be such
current market price per share of the Common Stock less the
fair market value (as determined by the Board of Directors
of the Corporation, whose determination shall be
conclusive) of the portion of the assets or evidences of
indebtedness so distributed or of such subscription rights
or warrants applicable to one share of Common Stock. Such
adjustment shall become effective retroactively immediately
after the record date for the determination of stockholders
entitled to receive such distribution.
(d) For the purpose of any computation under
Section (D)(6)(b) and (D)(6)(c), the current market price
of a share of Common Stock on any date shall be the average
of the daily Closing Prices for 10 consecutive Business
Days before the day in question.
(e) The Corporation shall be entitled to make
such additional adjustments in the conversion price, in
addition to those required by subsections D(6)(a), D(6)(b)
and D(6)(c), as shall be necessary in order that any
dividend or distribution in shares of stock, subdivision,
reclassification or combination of shares of Common Stock,
issuance of rights or warrants, evidences of indebtedness
or assets (other than cash), referred to above, shall not
be taxable to the Shareholders.
(f) In any case in which this Section (D)(6)
shall require that an adjustment be made retroactively
immediately following a record date, the Corporation may
elect to defer (but only for five (5) Business Days
following the filing of the statement referred to in
Section (D)(6)(g)) issuing to the holder of any shares of
this Series converted after such record date (i) the shares
of Common Stock and other capital stock of the Corporation
issuable upon such conversion over and above (ii) the
shares of Common Stock and other capital stock of the
Corporation issuable upon such conversion on the basis of
the conversion rate prior to adjustment.
(g) Notwithstanding any other provisions of this
Section (D)(6), the Corporation shall not be required to
make any adjustment of the conversion rate unless such
adjustment would require an increase or decrease of at
least 1% in such rate. Any lesser adjustment shall be
carried forward and shall be made at the time of and
together with the next subsequent adjustment which,
together with any adjustment or adjustments so carried
forward, shall amount to an increase or decrease of at
least 1% in such rate.
(h) Whenever an adjustment in the conversion
rate is required, the Corporation shall forthwith place on
file with its Transfer Agent a statement signed by its
President or a Vice President and by its Secretary or
Treasurer or one of its Assistant Secretaries or Assistant
Treasurers, stating the adjusted conversion rate determined
as provided herein. Such statements shall set forth in
reasonable detail such facts as shall be necessary to show
the reason and the manner of computing such adjustment.
Promptly after the adjustment of the conversion rate, the
Corporation shall mail a notice thereof to each holder of
shares of this Series.
(i) The term "Common Stock" as used in this
Paragraph D means the Corporation's Common Stock, $1.00 par
value, as the same exists at the date of filing of the
Certificate of Designation relating to this Series or any
other class of stock resulting from successive changes or
reclassifications of such Common Stock consisting solely of
changes in par value, or from par value to no par value, or
from no par value to par value. In the event that at any
time as a result of an adjustment made pursuant to Section
(D)(6)(a), the holder of any share of this Series
thereafter surrendered for conversion shall become entitled
to receive any shares of the Corporation other than shares
of its Common Stock, the conversion rate of such other
shares so receivable upon conversion of any share shall be
subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions
with respect to Common Stock contained in subparagraphs (a)
through (g) of this Section (D)(6), and the provisions of
Section (D)(1) through (5) and (7) through (11) with
respect to the Common Stock shall apply on like or similar
terms to any such other shares.
(7) In case of either (a) any consolidation or
merger to which the Corporation is a party, other than a
merger or consolidation in which the Corporation is the
surviving or continuing corporation and which does not
result in any reclassification of, or change (other than a
change in par value or from par value to no par value or
from no par value to par value, or as a result of a
subdivision or combination) in, outstanding shares of
Common Stock, or (b) any sale or conveyance to another
corporation of the property of the Corporation as an
entirety, then the Corporation, or such successor
corporation, as the case may be, shall make appropriate
provision so that the holder of each share of this Series
then outstanding shall have the right to convert such share
of this Series into the kind and amount of shares of stock
or other securities and property receivable upon such
consolidation, merger, sale or conveyance by a holder of
the number of shares of Common Stock into which such shares
of this Series might have been converted immediately prior
to such consolidation, merger, sale or conveyance, subject
to adjustments which shall be as nearly equivalent as may
be practicable to the adjustments provided for in this
Section (D). The provisions of this Section (D)(7) shall
apply similarly to successive consolidations, mergers,
sales or conveyances.
(8) Any shares of this Series which shall at any
time have been converted shall, after such conversion, have
the status of authorized but unissued shares of Preferred
Stock, without designation as to series until such shares
are once more designated as part of a particular series by
the Board of Directors. The Corporation shall at all times
reserve and keep available out of its authorized but
unissued stock, for the purpose of effecting the conversion
of the shares of this Series, such number of its duly
authorized shares of Common Stock as shall from time to
time be sufficient to effect the conversion of all
outstanding shares of this Series; provided, however, that
nothing contained herein shall preclude the Corporation
from satisfying its obligations in respect of the
conversion of the shares by delivery of purchased shares of
Common Stock which are held in the treasury of the
Corporation.
(9) If any shares of Common Stock required to be
reserved for purposes of conversion of shares of this
Series hereunder require registration with or approval of
any governmental authority before such shares may be issued
upon conversion, the Corporation shall cause such shares to
be duly registered or approved, as the case may be. The
Corporation will endeavor to list the shares of Common
Stock required to be delivered upon conversion of shares of
this Series prior to such delivery upon each national
securities exchange upon which the outstanding Common Stock
is listed at the time of such delivery.
(10) The Corporation shall pay any and all issue
or other taxes that may be payable in respect of any issue
or delivery of shares of Common Stock on conversion of
shares of this Series pursuant hereto. The Corporation
shall not, however, be required to pay any tax which is
payable in respect of any transfer involved in the issue or
delivery of Common Stock in a name other than that in which
the shares of this Series so converted were registered, and
no such issue or delivery shall be made unless and until
the person requesting such issue has paid to the
Corporation the amount of such tax, or has established, to
the satisfaction of the Corporation, that such tax has been
paid.
(11) Before taking any action that would result
in the conversion price being less than the then par value
of the Common Stock, the Corporation shall take any
corporate action which may, in the opinion of its counsel,
be necessary in order that the Corporation may validly and
legally issue fully paid and nonassessable shares of Common
Stock at the conversion price.
(E) EXCHANGE FOR DEBENTURES
(1) The shares of this Series are exchangeable
in whole, but not in part, at the sole option of the
Corporation, at any time on and after May 1, 1988, on any
Dividend Payment Date, into the Corporation's 7 3/4%
Convertible Subordinated Debentures Due 2011 (the
"Debentures") described in the Corporation's Registration
Statement on Form S-2 (Registration No. 33-4785) as filed
with the Securities and Exchange Commission (the
"Registration Statement"); provided, that on or prior to
the date fixed for exchange (the "Exchange Date") the
Corporation shall have paid to the holders of outstanding
shares of this Series and of Preferred Stock ranking on a
parity with this Series all accumulated and unpaid
dividends to the Exchange Date. Holders of outstanding
shares of this Series shall be entitled to receive $250
principal amount of Debentures in exchange for each share
of this Series held on the Exchange Date.
(2) In the event the Corporation shall exchange
shares of this Series, notice of such exchange shall be
given by first class mail, postage prepaid, mailed not less
than thirty (30) nor more than sixty (60) days prior to the
Exchange Date, to each record holder of shares of this
Series, at such holder's address as the same appears on the
books of the Corporation. Each such notice shall state:
(a) the Exchange Date; (b) the place or places where
certificates for such shares are to be surrendered for
exchange into Debentures; (c) that dividends on the shares
to be exchanged will cease to accrue on the Exchange Date;
and (d) the conversion price of the shares to be redeemed,
the Period within which conversion rights may be exercised
and the conversion rate at the time applicable. Prior to
giving notice of intention to exchange, the Corporation
shall execute and deliver with a bank or trust company
selected by the Corporation, and qualify under the Trust
Indenture Act of 1939, an Indenture (the "Indenture") in
substantially the form filed as an exhibit to the
Registration Statement with such changes therein as may be
required by law or usage. The Corporation shall cause the
Debentures to be authenticated on the Dividend Payment Date
on which the exchange is effective, and the Corporation
shall pay interest on the Debentures at the rate and on the
dates specified in the Indenture from the Exchange Date.
(3) Notice having been mailed as aforesaid, from
and after the Exchange Date (unless the Corporation shall
default in issuing Debentures in exchange for shares of
this Series or in making the final dividend payment on the
Exchange Date), dividends on the shares of this Series
shall cease to accrue, such shares shall no longer be
deemed to be outstanding, and all rights of the holders
thereof as stockholders of the Corporation (except the
right to receive from the Corporation the Debentures) shall
cease. Upon surrender (in accordance with the notice
provided for above in Section (E)(2)) of the certificates
for any shares of this Series so exchanged (properly
endorsed or assigned for transfer, if the Board of
Directors shall so require and the notice shall so state),
such shares shall be exchanged by the Corporation into
Debentures as aforesaid.
(4) All shares of this Series which have been
exchanged shall, after such exchange, have the status of
authorized but unissued shares of Preferred Stock, without
designation as to series until such shares are once more
designated as part of a particular series by the Board of
Directors.
(F) VOTING
(1) The shares of this Series shall have the
following voting rights:
(a) If and whenever at any time or times
dividends payable on shares of this Series shall have been
in arrears and unpaid in an aggregate amount equal to or
exceeding the amount of dividends payable thereon for six
quarterly dividend periods, then the holders of shares of
this Series, together with the holders of any other series
of Preferred Stock as to which dividends are in arrears and
unpaid in an aggregate amount equal to or exceeding the
amount of dividends payable thereon for six quarterly
dividend periods, shall have the exclusive right, voting
separately as a class with such other series, to elect two
directors of the Corporation, such directors to be in
addition to the number of directors constituting the Board
of Directors immediately prior to the accrual of such
right, the remaining directors to be elected by the other
class or classes of stock entitled to vote therefor at each
meeting of stockholders held for the purpose of electing
directors.
(b) Such voting right may be exercised initially
either at a special meeting of the holders of the Preferred
Stock having such voting right, called as hereinafter
provided, or at any annual meeting of stockholders held for
the purpose of electing directors, and thereafter at each
such annual meeting until such time as all dividends
accumulated on the shares of this Series shall have been
paid in full, at which time such voting right and the term
of the directors elected pursuant to Section (F)(1)(a)
shall terminate, subject to revesting on the basis set
forth in Section (F)(1)(a).
(c) At any time when such voting right shall
have vested in holders of the Preferred Stock, and if such
right shall not already have been initially exercised, a
proper officer of the Corporation shall, upon the written
request of the record holders of 10% in number of shares of
Preferred Stock having such voting right then outstanding,
addressed to the Secretary of the Corporation, call a
special meeting of the holders of Preferred Stock having
such voting right and of any other class or classes of
stock having voting power with respect to the election of
such directors. Such meeting shall be held at the earliest
practicable date upon the notice required for annual
meetings of stockholders at the place for holding annual
meetings of stockholders of the Corporation or, if none, at
a place designated by the Board of Directors. If such
meeting is not called by the proper officers of the
Corporation within 30 days after the personal service of
such written request upon the Secretary of the Corporation,
or within 35 days after mailing the same within the United
States of America, by registered mail, addressed to the
Secretary of the Corporation at its principal office (such
mailing to be evidenced by the registry receipt issued by
the postal authorities), then the record holders of 10% in
number of shares of the Preferred Stock then outstanding
which would be entitled to vote at such meeting may
designate in writing one of their number to call such
meeting at the expense of the Corporation, and such meeting
may be called by such person so designated upon the notice
required for annual meetings of stockholders and shall be
held at the same place as is elsewhere provided for in this
Section (F)(1)(c) or such other place as is selected by
such designated stockholder. Any holder of the Preferred
Stock who would be entitled to vote at such meeting shall
have access to the stock books of the Corporation for the
purpose of causing a meeting of stockholders to be called
pursuant to the provisions of this Section (F)(1).
Notwithstanding the provisions of this Section (F)(1), no
such special meeting shall be called during a period within
90 days immediately preceding the date fixed for the next
annual meeting of stockholders.
(d) At any meeting held for the purpose of
electing directors at which the holders of the Preferred
Stock shall have the right to elect directors as provided
herein, the presence in person or by proxy of the holders
of fifty percent (50%) of the then outstanding shares of
Preferred Stock having such right shall be required and
shall be sufficient to constitute a quorum of such class
for the election of directors by such class. At any such
meeting or adjournment thereof (i) the absence of a quorum
of the holders of the Preferred Stock having such right
shall not prevent the election of directors other than
those to be elected by the holders of the Preferred Stock,
and the absence of a quorum or quorums of the holders of
capital stock entitled to elect such other directors shall
not prevent the election of directors to be elected by the
holders of the Preferred Stock entitled to elect such
directors and (ii) except as otherwise required by law, in
the absence of a quorum of the holders of any class of
stock entitled to vote for the election of directors, a
majority of the holders present in person or by proxy of
such class shall have the power to adjourn the meeting for
the election of directors which the holders of such class
are entitled to elect, from time to time, without notice
other than announcement at the meeting, until a quorum is
present.
(e) Any vacancy in the Board of Directors in
respect of a director elected by holders of Preferred Stock
pursuant to the voting right created under this Section
(F)(1) shall be filled by vote of the remaining director so
elected, or if there be no such remaining director, by the
holders of Preferred Stock entitled to elect such director
or directors at a special meeting called in accordance with
the procedures set forth in Section (F)(1)(c), or, if no
such special meeting is called, at the next annual meeting
of stockholders. Upon any termination of such voting
right, subject to the requirements of the Business
Corporation Law of New York, the term of office of all
directors elected by holders of Preferred Stock voting
separately as a class shall terminate.
(f) So long as any shares of this Series remain
outstanding, the Corporation shall not, either directly or
indirectly or through merger or consolidation with any
other corporation, without the affirmative vote at a
meeting or the written consent with or without a meeting of
the holders of at least 66 2/3% in number of shares of this
Series then outstanding, amend, alter or repeal any of the
provisions of this Paragraph D relating to this Series or
the Certificate of Incorporation of the Corporation, or
authorize any reclassification of the shares of this
Series, so as in any such case to affect adversely the
preferences, special rights or powers of the shares of this
Series.
(g) In exercising the voting rights set forth in
this Section (F)(l), each share of Preferred Stock entitled
to such voting right shall have equal voting power,
notwithstanding any greater or lesser general voting powers
of one or more series of Preferred Stock.
(2) No consent of holders of shares of this
Series shall be required for (i) the creation of any
indebtedness of any kind of the Corporation, (ii) the
authorization or issuance of any class of stock of the
Corporation subordinate to the shares of this Series as to
dividends and upon liquidation, dissolution or winding up
of the Corporation or (iii) subject to Section (F)(1)(f),
the issuance of any shares of Preferred Stock.
(G) LIQUIDATION RIGHTS
(1) Upon the dissolution, liquidation or winding
up of the Corporation, whether voluntary or involuntary,
the holders of the shares of this Series shall be entitled
to receive out of the assets of the Corporation available
for distribution to stockholders, before any payment or
distribution shall be made on the Common Stock or on any
other class of stock ranking junior to this Series upon
liquidation, the amount of $250 per share, plus all
accumulated and unpaid dividends to the date of final
distribution.
(2) Neither the sale, lease or exchange (for
cash, shares of stock, securities or other consideration)
of all or substantially all the property and assets of the
Corporation nor the merger or consolidation of the
Corporation into or with any other corporation or the
merger or consolidation of any other corporation into or
with the Corporation, shall be deemed to be a dissolution,
liquidation or winding up, voluntary or involuntary, for
the purposes of this Section (G).
(3) After the payment to the holders of the
shares of this Series of the full preferential amounts
provided for in this Section (G), the holders of this
Series as such shall have no right or claim to any of the
remaining assets of the Corporation.
(4) In the event the assets of the Corporation
available for distribution to the holders of shares of this
Series upon any dissolution, liquidation or winding up of
the Corporation, whether voluntary or involuntary, shall be
insufficient to pay in full all amounts to which such
holders are entitled pursuant to Section (G)(1), no such
distribution shall be made on account of any shares of any
other class or series of Preferred Stock ranking on a
parity with the shares of this Series upon such
dissolution, liquidation or winding up unless proportionate
distributive amounts shall be paid on account of the shares
of this Series, ratably, in proportion to the full
distributable amounts for which holders of all such parity
shares are respectively entitled upon such dissolution,
liquidation or winding up.
(H) PRIORITY
(1) For purposes of this Paragraph D, any stock
of any class or series of the Corporation shall be deemed
to rank:
(i) Prior to the shares of this Series,
either as to dividends or upon liquidation, if the
holders of such class or classes shall be entitled to
the receipt of dividends or of amounts distributable
upon dissolution, liquidation or winding up of the
Corporation, whether voluntary or involuntary, as the
case may be, in preference or priority to the holders
of shares of this Series;
(ii) On a parity with shares of this Series,
either as to dividends or upon liquidation, whether or
not the dividend rates, Dividend Payment Dates, or
redemption or liquidation prices per share or sinking
fund provisions, if any, are different from those of
this Series, if the holders of such stock are entitled
to the receipt of dividends or of amounts
distributable upon dissolution, liquidation or winding
up of the Corporation, whether voluntary or
involuntary, in proportion to their respective
dividend rates or liquidation prices, without
preference or priority, one over the other, as between
the holders of such stock and the holders of shares of
this Series; and
(iii) Junior to shares of this Series, either
as to dividends or upon liquidation, if such class or
series shall be Common Stock or if the holders of
shares of this Series shall be entitled to receipt of
dividends or of amounts distributable upon
dissolution, liquidation or winding up of the
Corporation, whether voluntary or involuntary, as the
case may be, in preference or priority to the holders
of shares of such class or series.
E. The voting powers and the designations,
preferences and relative, optimal and other special rights
and the qualifications, limitations and restrictions of the
Participating Preferred Stock are as follows:
(A) DESIGNATION AND SIZE OF ISSUE
The distinctive designation of the series shall
be "Participating Preferred Stock" (hereinafter referred to
as this "Series"). The number of shares which shall
constitute this Series shall be 200,000 shares. Each share
of this Series shall have a par value of $1.00. The number
of authorized shares of this Series may be increased or
decreased (but not below the number of shares thereof then
outstanding) by further resolution duly adopted by the
Board of Directors of the Corporation and by the filing of
a certificate pursuant to the provisions of the Business
Corporation Law of the State of New York stating that such
increase or decrease has been so authorized.
(B) DIVIDENDS
(1) Dividends on each share or fraction of a
share of this Series shall be payable, when and as declared
by the Board of Directors or by a committee of said Board
of Directors duly authorized by said Board to declare such
dividends, on each date that dividends (other than
dividends payable in capital stock of the Corporation) are
payable on capital stock comprising part of the Reference
Package (as defined in paragraph (2) of this Section (B)),
in an amount per whole share of this Series equal to the
aggregate amount of dividends (other than dividends payable
in capital stock of the Corporation) that would be payable
on such date to a holder of the Reference Package. Each
such dividend shall be paid to the holders of record of
shares of this Series as they appear on the stock register
of the Corporation on such record date, not exceeding 60
days preceding the payment date thereof, as shall be fixed
by the Board of Directors of the Corporation or by a
committee of said Board of Directors duly authorized to fix
such date. Dividends on account of arrears for any past
dividend payment dates may be declared and paid at any
time, without reference to any regular dividend payment
date, to holders of record on such date, not exceeding 60
days preceding the payment date thereof, as may be fixed by
the Board of Directors of the Corporation or by a committee
of said Board of Directors duly authorized to fix such
date. Dividends on each share of this Series or fraction
of such share shall be cumulative from the date such share
or fraction of a share is originally issued; provided that
any such share or fraction originally issued after a
dividend record date and on or prior to the dividend
payment date to which such record date relates shall not be
entitled to receive the dividend payable on such dividend
payment date or any amount in respect of the period from
such original issuance to such dividend payment date. For
purposes of this paragraph (1), any redemption, purchase or
other acquisition of any capital stock for any
consideration by the Corporation pro rata or by lot from
the holders thereof shall be deemed to be a dividend on
such capital stock.
(2) The term "Reference Package" shall initially
mean 100 shares of Common Stock, par value $1.00 per share
("Common Stock"), of the Corporation. In the event the
Corporation shall at any time after the Separation Date (as
defined in the Rights Agreement, dated as of March 2, 1988,
between the Corporation and Manufacturers Hanover Trust
Company, as Rights Agent) (i) declare or pay a dividend on
any capital stock comprising part of the Reference Package
payable in capital stock, (ii) subdivide any capital stock
comprising part of the Reference Package, (iii) combine any
capital stock comprising part of the Reference Package into
a smaller number of shares or (iv) issue in a
reclassification, merger or consolidation any shares of
capital stock in respect of or in lieu of any existing
capital stock comprising part of the Reference Package,
then and in each such case the Reference Package after such
event shall be the capital stock that a holder of the
Reference Package immediately prior to such event would
hold thereafter as a result thereof.
(3) No full dividends shall be declared or paid
or set apart for payment on the Preferred Stock of any
series ranking, as to dividends, on a parity with or junior
to this Series for any period unless full cumulative
dividends have been or contemporaneously are declared and
paid or declared and a sum sufficient for the payment
thereof set apart for such payment on this Series for all
dividend payment periods terminating on or prior to the
date of payment of such full cumulative dividends. When
dividends are not paid in full, as aforesaid, upon the
shares of this Series and any other Preferred Stock ranking
on a parity as to dividends with this Series, all dividends
declared upon shares of this Series and any other Preferred
Stock ranking on a parity as to dividends with this Series
shall be declared pro rata so that the amount of dividends
declared per share on this Series and such other Preferred
Stock shall in all cases bear to each other the same ratio
that accumulated dividends per share on the shares of this
Series and such other Preferred Stock bear to each other.
Holders of shares of this Series shall not be entitled to
any dividends, whether payable in cash, property or stock,
in excess of full cumulative dividends, as herein provided
on this Series. No interest, or sum of money in lieu of
interest, shall be payable in respect of any dividend
payment or payments on this Series which may be in arrears.
(4) So long as any shares of this Series are
outstanding, no dividend (other than a dividend in Common
Stock or in any other stock ranking junior to this Series
as to dividends and upon liquidation) shall be declared or
paid or set aside for payment or other distribution
declared or made upon the Common Stock or upon any other
stock ranking junior to or on a parity with this Series as
to dividends or upon liquidation, nor shall any Common
Stock or any other stock of the Corporation ranking junior
to or on a parity with this Series as to dividends or upon
liquidation be redeemed, purchased or otherwise acquired
for any consideration (or any moneys be paid to or made
available for a sinking fund for the redemption of any
shares of any such stock) by the Corporation (except by
conversion into or exchange for stock of the Corporation
ranking junior to this Series as to dividends and upon
liquidation) unless, in each case, the full cumulative
dividends (including the dividend to be due upon payment of
such dividend, distribution, redemption, purchase or other
acquisition) on all outstanding shares of this Series shall
have been, or shall contemporaneously be, paid.
(5) Notwithstanding anything in this Section (B)
to the contrary, the holders of shares of every other
series of Preferred Stock shall be entitled to the receipt
of dividends in preference or priority to the holders of
shares of this Series.
(C) REDEMPTION
(1) The shares of this Series shall be
redeemable at the option of the Corporation, as a whole or
in part, at any time or from time to time after the date
which is two years following the Separation Date referred
to in paragraph (2) of Section (B), at a redemption price
per share equal to the Market Price (as hereinafter
defined) of the Common Stock on the Trading Day (as
hereinafter defined) immediately prior to the date fixed
for redemption, multiplied by one hundred (the
"Multiplier"), plus in each case a sum equal to dividends
accrued but unpaid.
(2) In the event the Corporation shall at any
time on or after the date of original issuance of shares of
this Series declare or pay any dividend on the shares of
Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the
outstanding Common Stock (by reclassification or otherwise
than by payment of a dividend in Common Stock), into a
greater or lesser number of shares of Common Stock, then in
each such case the amount to which holders of Participating
Preferred Stock were entitled (without giving effect to
such event), shall be adjusted by multiplying such amount
by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares
of Common Stock that were outstanding immediately prior to
such event.
(3) As used herein, the term "Market Price" per
share of the Common Stock on any date of determination
shall mean the average of the daily closing prices per
share of the Common Stock (determined as described below)
on each of the 20 consecutive Trading Days through and
including the Trading Day immediately preceding such date;
provided, however, that if the Company shall at any time
(i) declare a dividend on the Common Stock payable in
Common Stock, (ii) subdivide the outstanding Common Stock,
(iii) combine the outstanding Common Stock into a smaller
number of shares of Common Stock or (iv) issue any shares
in a reclassification of the Common Stock, and such event
or an event of a type analogous to any such event shall
have caused the closing prices used to determine the Market
Price on any Trading Days not to be fully comparable with
the closing price on such date of determination, each such
closing price so used shall be appropriately adjusted in
order to make it fully comparable with the closing price on
such date of determination. The closing price per share of
the Common Stock on any date shall be the last sale price,
regular way, or, in case no such sale takes place on such
date, the average of the closing bid and asked prices,
regular way, for each share of the Common Stock, in either
case as reported in the principal consolidated transaction
reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction
reporting system with respect to securities listed on the
principal national securities exchange on which the Common
Stock is listed or admitted to trading or, if the Common
Stock is not listed or admitted to trading on any national
securities exchange, the average of the high bid and low
asked prices for each share of Common Stock in the over-
the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotation System
("NASDAQ") or such other system then in use, or, if on any
such date the Common Stock is not quoted by any such
organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a
market in the securities selected by the Board of Directors
of the Corporation; provided, however, that if any such
date the Common Stock is not listed or admitted for trading
on a national securities exchange or traded in the over-
the-counter market, the closing price per share of the
Common Stock on such date shall mean the fair value per
share of Common Stock on such date as determined in good
faith by the Board of Directors of the Corporation, after
consultation with a nationally recognized investment
banking firm with respect to the fair value per share of
such securities, and set forth in a certificate delivered
to the Corporation.
(4) As used herein, the term "Trading Day", when
used with respect to the Common Stock, shall mean a day on
which the principal national securities exchange on which
the Common Stock is listed or admitted to trading is open
for the transaction of businesses or, if the Common Stock
is not listed or admitted to trading on any national
securities exchange, a Business Day (defined to mean any
day on which banking institutions in New York, New York are
generally authorized or obligated by law or executive order
to close.)
(5) In the event that fewer than all the
outstanding shares of the Series are to be redeemed, the
number of shares to be redeemed and the method for
selection of those shares shall be as determined by the
Board of Directors.
(6) In the event the Corporation shall redeem
shares of this Series, notice of such redemption shall be
given by first class mail, postage prepaid, mailed not less
than 30 nor more than 60 days prior to the redemption date,
to each holder of record of the shares to be redeemed, at
such holder's address as the same appears on the stock
register of the Corporation. Each such notice shall state:
(i) the redemption date; (ii) the number of shares of this
Series to be redeemed and, if fewer than all the shares
held by such holder are to be redeemed, the number of such
shares to be redeemed from such holder; (iii) the
redemption price; (iv) the place or places where
certificates for such shares are to be surrendered for
payment of the redemption price; and (v) that dividends on
the shares to be redeemed will cease to accrue on such
redemption date.
(7) Notice having been mailed as aforesaid, from
and after the redemption date (unless default shall be made
by the Corporation in providing money for the payment of
the redemption price) dividends on the shares of this
Series so called for redemption shall cease, and said
shares shall no longer be deemed to be outstanding, and all
rights of the holders thereof as shareholders of the
Corporation (except the right to receive from the
Corporation the redemption price) shall cease. Upon
surrender in accordance with said notice of the
certificates for any shares so redeemed (properly endorsed
or assigned for transfer, if the Board of Directors of the
Corporation shall so require and the notice shall so
state), such shares shall be redeemed by the Corporation at
the redemption price aforesaid. In case fewer than all the
shares represented by any such certificate are redeemed, a
new certificate shall be issued representing the unredeemed
shares without cost to the holder thereof.
(8) Any shares of this Series which shall at any
time have been redeemed shall, after such redemption, have
the status of authorized but unissued shares of Preferred
Stock, without designation as to series until such shares
are once more designated as part of a particular series by
the Board of Directors.
(9) Notwithstanding the foregoing provisions of
this Section (C), if any dividends on this Series are in
arrears, no shares of this Series shall be redeemed unless
all outstanding shares of this Series are simultaneously
redeemed, and the Corporation shall not purchase or
otherwise acquire any shares of this Series; provided,
however, that the foregoing shall not prevent the purchase
or acquisition of shares of this Series pursuant to a
purchase or exchange offer made on the same terms to
holders of all outstanding shares of this Series.
(D) CONVERSION OR EXCHANGE
The holders of shares of this Series shall not
have any rights herein to convert such shares into or
exchange such shares for shares of any other class or
classes or of any other series of any class or classes of
capital stock of the Corporation.
(E) VOTING
(1) The shares of this Series shall have the
following voting rights:
(a) If and whenever at any time or times
dividends payable on shares of this Series shall have been
in arrears and unpaid in an aggregate amount equal to or
exceeding the amount of dividends payable thereon for six
quarterly dividend periods, then the holders of shares of
this Series, together with the holders of any other series
of Preferred Stock as to which dividends are in arrears and
unpaid in an aggregate amount equal to or exceeding the
amount of dividends payable thereon for six quarterly
dividend periods, shall have the exclusive right, voting
separately as a class with such other series, to elect two
directors of the Corporation, such directors to be in
addition to the number of directors constituting the Board
of Directors immediately prior to the accrual of such
right, the remaining directors to be elected by the other
class or classes of stock entitled to vote therefor at each
meeting of shareholders held for the purpose of electing
directors.
(b) Such voting right may be exercised
initially either at a special meeting of the holders of the
Preferred Stock having such voting right, called as
hereinafter provided, or at any annual meeting of
shareholders held for the purpose of electing directors,
and thereafter at each such annual meeting until such time
as all dividends accumulated on the shares of this Series
shall have been paid in full, at which time such voting
right and the term of the directors elected pursuant to
Section (E)(1)(a) shall terminate, subject to revesting on
the basis set forth in Section (E)(1)(a).
(c) At any time when such voting right
shall have vested in holders of the Preferred Stock, and if
such right shall not already have been initially exercised,
a proper officer of the Corporation shall, upon the written
request of the record holders of 10% in number of shares of
Preferred Stock having such voting right then outstanding,
addressed to the Secretary of the Corporation, call a
special meeting of the holders of Preferred Stock having
such voting right and of any other class or classes of
stock having voting power with respect to the election of
such directors. Such meeting shall be held at the earliest
practicable date upon the notice required for annual
meetings of shareholders at the place for holding annual
meetings of shareholders of the Corporation or, if none, at
a place designated by the Board of Directors. If such
meeting is not called by the proper officers of the
Corporation within 30 days after the personal service of
such written request upon the Secretary of the Corporation,
or within 35 days after mailing the same within the United
States of America, by registered mail, addressed to the
Secretary of the Corporation at its principal office (such
mailing to be evidenced by the registry receipt issued by
the postal authorities), then the record holders of 10% in
number of shares of the Preferred Stock then outstanding
which would be entitled to vote at such meeting may
designate in writing one of their number to call such
meeting at the expense of the Corporation, and such meeting
may be called by such person so designated upon the notice
required for annual meetings of shareholders and shall be
held at the same place as is elsewhere provided for in this
Section (E)(1)(c) or such other place as is selected by
such designated shareholder. Any holder of the Preferred
Stock who would be entitled to vote at such meeting shall
have access to the stock books of the Corporation for the
purpose of causing a meeting of shareholders to be called
pursuant to the provisions of this Section (E)(1).
Notwithstanding the provisions of this Section (E)(1), no
such special meeting shall be called during a period within
90 days immediately preceding the date fixed for the next
annual meeting of shareholders.
(d) At any meeting held for the purpose of
electing any directors at which the holders of the
Preferred Stock shall have the right to elect directors as
provided herein, the presence in person or by proxy of the
holders of fifty percent (50%) of the then outstanding
shares of Preferred Stock having such right shall be
required and shall be sufficient to constitute a quorum of
such class for the election of directors by such class. At
any such meeting or adjournment thereof (i) the absence of
a quorum of the holders of the Preferred Stock having such
right shall not prevent the election of directors other
than those to be elected by the holders of the Preferred
Stock, and the absence of a quorum or quorums of the
holders of capital stock entitled to elect such other
directors shall not prevent the election of directors to be
elected by the holders of the Preferred Stock entitled to
elect such directors and (ii) except as otherwise required
by law, in the absence of a quorum of the holders of any
class of stock entitled to vote for the election of
directors, a majority of the holders present in person or
by proxy of such class shall have the power to adjourn the
meeting for the election of directors which the holders of
such class are entitled to elect, from time to time,
without notice other than announcement at the meeting,
until a quorum is present.
(e) Any vacancy in the Board of Directors
in respect of a director elected by holders of Preferred
Stock pursuant to the voting right created under this
Section (E)(1) shall be filled by vote of the remaining
director so elected, or if there be no such remaining
director, by the holders of Preferred Stock entitled to
elect such director or directors at a special meeting
called in accordance with the procedures set forth in
Section (E)(1)(c), or, if no such special meeting is
called, at the next annual meeting of shareholders. Upon
any termination of such voting right, subject to the
requirements of the Business Corporation Law of New York,
the term of office of all directors elected by holders of
Preferred Stock voting separately as a class shall
terminate.
(f) So long as any shares of this Series
remain outstanding, the Corporation shall not, either
directly or indirectly or through merger or consolidation
with any other corporation, without the affirmative vote at
a meeting or the written consent with or without a meeting
of the holders of at least 66 2/3% in number of shares of
this Series then outstanding, amend, alter or repeal any of
the provisions of this Paragraph E relating to this Series
or the Certificate of Incorporation of the Corporation, or
authorize any reclassification of the shares of this
Series, so as in any such case to affect adversely the
preferences, special rights or powers of the shares of this
Series.
(g) In exercising the voting rights set
forth in this Section (E)(1), each share of Preferred Stock
entitled to such voting right shall have equal voting
power, notwithstanding any greater or lesser general voting
powers of one or more series of Preferred Stock.
(2) No consent of holders of shares of this
Series shall be required for (i) the creation of any
indebtedness of any kind of the Corporation, (ii) the
authorization or issuance of any class of stock of the
Corporation subordinate to the shares of this Series as to
dividends and upon liquidation, dissolution or winding up
of the Corporation or (iii) subject to Section (E)(1)(f),
the issuance of the shares of Preferred Stock.
(F) LIQUIDATION RIGHTS
(1) Upon the dissolution, liquidation or winding
up of the Corporation, whether voluntary or involuntary,
the holders of the shares of this Series shall be entitled
to receive out of the assets of the Corporation available
for distribution to stockholders, before any payment or
distribution shall be made on the Common Stock or on any
other class of stock ranking junior to this Series upon
liquidation, the amount of $5,000 per share, plus all
accumulated and unpaid dividends to the date of final
distribution.
(2) Neither the sale, lease or exchange (for
cash, shares of stock, securities or other consideration)
of all or substantially all the property and assets of the
Corporation nor the merger or consolidation of the
Corporation into or with any other corporation or the
merger or consolidation of any other corporation into or
with the Corporation, shall be deemed to be a dissolution,
liquidation or winding up, voluntary or involuntary, for
the purposes of this Section (F).
(3) After the payment to the holders of the
shares of this Series of the full preferential amounts
provided for in this Section (F), the holders of this
Series as such shall have no right or claim to any of the
remaining assets of the Corporation.
(4) In the event the assets of the Corporation
available for distribution to the holders of shares of this
Series upon any dissolution, liquidation or winding up of
the Corporation, whether voluntary or involuntary, shall be
insufficient to pay in full all amounts to which such
holders are entitled pursuant to Section (F)(1), no such
distribution shall be made on account of any shares of any
other class or series of Preferred Stock ranking on a
parity with the shares of this Series upon such
dissolution, liquidation or winding up unless proportionate
distributive amounts shall be paid on account of the shares
of this Series, ratably, in proportion to the full
distributable amounts for which holders of all such party
shares are respectively entitled upon such dissolution,
liquidation or winding up.
(5) Notwithstanding anything in this Section (F)
to the contrary, the holders of shares of every other
series of Preferred Stock shall be entitled to the receipt
of amounts distributable upon dissolution, liquidation or
winding up of the Corporation in preference or priority to
the holders of shares of this Series.
(G) PRIORITY
(1) For purposes of this Section G, any stock of
any class or series of the Corporation shall be deemed to
rank:
(i) Prior to the shares of this Series,
either as to dividends or upon liquidation, if the holders
of such class or classes shall be entitled to the receipt
of dividends or of amounts distributable upon dissolution,
liquidation or winding up of the Corporation, whether
voluntary or involuntary, as the case may be, in preference
or priority to the holders of shares of this Series;
(ii) On a parity with shares of this
Series, either as to dividends or upon liquidation, whether
or not the dividend rates, dividend payment dates, or
redemption or liquidation prices per share or sinking fund
provisions, if any, are different from those of this
Series, if the holders of such stock are entitled to the
receipt of dividends or of amounts distributable upon
dissolution, liquidation or winding up of the Corporation,
whether voluntary or involuntary, in proportion to their
respective dividend rates or liquidation prices, without
preference or priority, one over the other, as between the
holders of such stock and the holders of shares of this
Series; and
(iii) Junior to shares of this Series, either
as to dividends or upon liquidation, if such class or
series shall be Common Stock or if the holders of shares of
this Series shall be entitled to receipt of dividends or of
amounts distributable upon dissolution, liquidation or
winding up of the Corporation, whether voluntary or
involuntary, as the case may be, in preference or priority
to the holders of shares of such class or series.
F. The voting powers and the designations,
preferences and relative, optimal and other special rights
and the qualifications, limitations and restrictions of the
Series B $19.375 Convertible Exchangeable Preferred Stock
are as follows:
(A) DESIGNATION AND SIZE OF ISSUE
The distinctive designation of the series shall
be "Series B $19.375 Convertible Exchangeable Preferred
Stock" (hereinafter referred to as this "Series"). The
number of shares which shall constitute this Series shall
be 66,500 shares. Each share of this Series shall have a
par value of $1.00.
(B) DIVIDENDS
(1) The annual rate of dividends payable on each
share of this Series shall be $19.375.
(2) Dividends shall be payable in cash,
quarterly on the first day of January, April, July and
October of each year, commencing April 1, 1992 (each such
date hereinafter referred to as a "Dividend Payment Date"),
except that if such date is not a Business Day (as
hereinafter defined), then such dividend shall be payable
on the next succeeding calendar day which is a Business
Day. The amount of dividends payable on shares of this
Series for each full quarterly dividend period shall be
computed by dividing by four the annual rate per share set
forth in Section (B)(1). Dividends payable on shares of
this Series for the initial dividend period and for any
period less than a full quarterly period shall be computed
on the basis of a 360-day year of twelve 30-day months.
Dividends shall be payable to the record holders of shares
of this Series as of the close of business on a date, not
more than sixty (60) days preceding the payment date
thereof, fixed by the Board of Directors of the
Corporation. Dividends in arrears may be declared and paid
at any time, without reference to any regular Dividend
Payment Date, to record holders of Shares of this Series as
of the close of business on a date, not more than sixty
(60) days preceding the payment date thereof, fixed by the
Board of Directors of the Corporation. As used in this
Paragraph F, the term "Business Day" means a day other than
Saturday or Sunday and other than a day on which banking
institutions in New York, New York are authorized by law or
executive order to close.
(3) Dividends payable on shares of this Series
shall be cumulative and shall accumulate on each Dividend
Payment Date from the date of original issue. Accumulation
of dividends shall not bear interest.
(4) Except as hereinafter provided, so long as
any shares of this Series are outstanding, no dividend
(other than a dividend in Common Stock or in any other
stock of the Corporation ranking junior to this Series as
to dividends and as to liquidation (collectively, the
"Junior Stock")) shall be declared or paid or set aside for
payment, and no other distribution shall be declared or
made, upon the Junior Stock or upon any other stock of the
Corporation ranking on a parity with this Series as to
dividends or as to liquidation, nor shall any Junior Stock
nor any other stock of the Corporation ranking on a parity
with this Series as to dividends or as to liquidation be
redeemed, purchased or otherwise acquired for any
consideration (or any monies be paid to or made available
for a sinking fund for the redemption of any shares of any
such stock) by the Corporation (except by conversion into
or exchange for Junior Stock of the Corporation), unless,
in each case, the full cumulative dividends on all
outstanding shares of this Series shall have been paid or
contemporaneously are declared and paid through the last
Dividend Payment Date. When dividends are not paid in full
upon the shares of this Series and any other stock of the
Corporation ranking on a parity as to dividends with this
Series, all dividends declared upon shares of this Series
and any stock of the Corporation ranking on a parity as to
dividends with this Series shall be declared pro rata so
that the amount of dividends declared per share on this
Series and such other stock shall in all cases bear to each
other the same ratio that accrued dividends per share on
the shares of this Series and such other stock bear to each
other. Holders of shares of this Series shall not be
entitled to any dividends, whether payable in cash,
property or stock, in excess of full cumulative dividends,
as herein provided, on this Series. No interest, or sum of
money in lieu of interest, shall be payable in respect of
any dividend payment or payments on this Series which may
be in arrears.
(C) REDEMPTION
(1) The Corporation, at the option of the Board
of Directors, may, subject to the provisions of Section
(B)(4), (C)(2) and (C)(8) hereof, redeem at any time or
from time to time all or any part of the outstanding shares
of this Series. The redemption price for each share of
this Series called for redemption shall be $250 together
with accumulated and unpaid dividends to the date fixed for
redemption.
(2) Notwithstanding the provisions of Section
(C)(1) above, the Corporation may not redeem any shares of
this Series (i) prior to February 7, 1994 and (ii) prior to
the dates set forth below unless the Closing Price (as
determined in Section (C)(3)) of the Corporation's Common
Stock shall have equaled or exceeded the amount set forth
opposite such date for at least twenty (20) Trading Days
(as hereinafter defined) within thirty (30) consecutive
Trading Days ending within five Trading Days prior to the
date notice of redemption is given.
In order to Redeem Closing Price Must
Prior to February 7, Equal or Exceed
1995 $22
1996 $21
1997 $20
For purposes of this Paragraph F, Trading Day means, so
long as the Common Stock is listed or admitted to trading
on the New York Stock Exchange (or any successor to such
Exchange), a day on which the New York Stock Exchange (or
such successor) is open for the transaction of business,
or, if the Common Stock is not listed or admitted to
trading on such Exchange, a day on which the principal
national securities exchange on which the Common Stock is
listed is open for the transaction of business, or, if the
Common Stock is not listed or admitted to trading on any
national securities exchange, a day on which any New York
Stock Exchange member firm is open for the transaction of
business.
(3) For purposes of this Paragraph F, the
Closing Price of the Corporation's Common Stock shall be
the last sale price as shown on the Composite Tape of the
New York Stock Exchange, or, in the case no such sale takes
place on such day, the average of the closing bid and asked
prices on the New York Stock Exchange, or, if the Common
Stock is not listed or admitted to trading on such
Exchange, on the principal national securities exchange on
which the Common Stock is listed or admitted to trading,
or, if it is not listed or admitted to trading on any
national securities exchange, the average of the closing
bid and asked prices as furnished by any New York Stock
Exchange member firm selected from time to time by the
Board of Directors of the Corporation for such purpose
(other than the Corporation or a subsidiary thereof).
(4) In the event that fewer than all the
outstanding shares of this Series are to be redeemed, the
number of shares to be redeemed shall be determined by the
Board of Directors, and the shares to be redeemed shall be
determined by lot or by any other method as may be
determined by the Board of Directors in its sole discretion
to be equitable.
(5) In the event the Corporation shall redeem
shares of this Series, notice of such redemption shall be
given by first class mail, postage prepaid, mailed not less
than thirty (30) nor more than sixty (60) days prior to the
redemption date, to each record holder of the shares to be
redeemed, at such holder's address as the same appears on
the books of the Corporation. Each such notice shall
state: (i) the redemption date; (ii) the total number of
shares of this Series to be redeemed and, if fewer than all
the shares held by such holder are to be redeemed, the
number of such shares to be redeemed from such holder;
(iii) the redemption price; (iv) the place or places where
certificates for cash shares are to be surrendered for
payment of the redemption price; (v) that dividends on the
shares to be redeemed will cease to accrue on such
redemption date; and (vi) the conversion rights of the
shares to be redeemed, the period within which conversion
rights may be exercised, and the conversion rate at the
time applicable.
(6) If notice shall have been given as provided
in Section (C)(5) and the Corporation shall have provided
moneys at the time and place specified for the payment of
the redemption price pursuant to such notice, then from and
after the redemption date, dividends on the shares of this
Series so called for redemption shall cease to accrue, such
shares shall no longer be deemed to be outstanding, and all
rights of the holders thereof as stockholders of the
Corporation (except the right to receive from the
Corporation the redemption price without interest) shall
cease. Upon surrender (in accordance with the notice) of
the certificates for any shares so redeemed (properly
endorsed or assigned for transfer, if the Board of
Directors of the Corporation shall so require and the
notice shall so state), such shares shall be redeemed by
the Corporation at the redemption price set forth in
Section (C)(1). In case fewer than all the shares
represented by any such certificate are to be redeemed, a
new certificate shall be issued representing the unredeemed
shares, without cost to the holder thereof.
(7) Any shares of this Series which have been
redeemed shall, after such redemption, have the status of
authorized but unissued shares of Preferred Stock, without
designation as to series, until such shares are once more
designated as part of a particular series by the Board of
Directors.
(8) Notwithstanding the foregoing provisions of
this Section (C), unless the full cumulative dividends on
all outstanding shares of this Series and any other
Preferred Stock ranking on a parity with this Series shall
have been paid or contemporaneously are declared and paid
through the last Dividend Payment Date, no shares of this
Series shall be redeemed, and the Corporation shall not
purchase or otherwise acquire any shares of this Series.
(D) CONVERSION RIGHTS
(1) (a) Common Stock. Each holder of a share
of this Series shall have the right, at any time on and
after February 7, 1994, or, as to any share of this Series
called for redemption or exchange, at any time prior to the
close of business on the date fixed for such redemption or
exchange, to convert such share into fully paid and
nonassessable shares of Common Stock of the Corporation at
a rate of 15.244 shares of Common Stock for each share of
this Series, subject to adjustment as provided in this
Section (D) (the "conversion rate"). For purposes of this
Paragraph F and the conversion of Debentures referred to in
Section (E), the relationship between the "conversion rate"
and the "conversion price" per share of Common Stock shall
be such that the conversion price shall equal $250 divided
by the conversion rate. The initial conversion price shall
be $16.40 per share of Common Stock.
(b) $19.375 Convertible Exchangeable
Preferred Stock. Subject to the limitations set forth
below, at any time after February 7, 1994, the holders of a
majority of shares of this Series may give notice to the
Corporation requesting the conversion of all, but not fewer
than all, such shares into fully paid and nonassessable
shares of the $19.375 Convertible Exchangeable Preferred
Stock of the Corporation (the "Series A Stock"). Upon such
notice, the Corporation shall (i) notify all other holders
of shares of this Series that such holders may also, upon
prompt notice to the Corporation, request such conversion
and (ii) use its best efforts to prepare and enter into
documentation required to effect the conversion of all, but
not fewer than all, of the shares of this Series whose
holders have elected conversion, into fully paid and
nonassessable shares of the Series A Stock. The rate at
which shares of this Series may be converted into shares of
Series A Stock shall be one share of Series A Stock for
each share of this Series, subject to adjustment as
provided in this Section (D) (the "Series A conversion
rate"). The Corporation shall not be required to effect
any conversion under this paragraph (b) if (i) such
conversion would conflict with or result in a breach of or
default under any agreement or instrument to which the
Corporation is a party, or result in any violation of any
provision of the Corporation's Certificate of Incorporation
or By-Laws or any statute, order, rule or regulation of any
of any court, governmental agency or body having
jurisdiction over the Corporation or any of its properties,
(ii) such conversion would require approval of any
shareholders of the Corporation, (iii) such conversion,
would, in the good faith judgement of the Board of
Directors of the Corporation, be unduly burdensome, or (iv)
the Series A Stock is no longer outstanding or listed on
any national securities exchange.
(2) If any shares of this Series are surrendered
for conversion subsequent to the record date preceding a
Dividend Payment Date but on or prior to such Dividend
Payment Date (except shares called for redemption on a
redemption date between such record date and Dividend
Payment Date), the registered holder of such shares at the
close of business on such record date shall be entitled to
receive the dividend payable on such shares on such
Dividend Payment Date notwithstanding the conversion
thereof. Shares of this Series surrendered for conversion
during the period from the close of business on any record
date for the payment of dividends next preceding any
Dividend Payment Date to the opening of business on such
Dividend Payment Date shall (except in the case of shares
which have been called for redemption on a redemption date
within such period) be accompanied by payment in New York
Clearing House funds or other funds acceptable to the
Corporation of an amount equal to the dividend payable on
such Dividend Payment Date on the share being surrendered
for conversion. Except as provided in this Section (D)(2),
no adjustments in respect of or payments of dividends on
shares surrendered for conversion or any dividend on the
Common Stock or Series A Stock, as the case may be, issued
upon conversion shall be made upon the conversion of any
shares of this Series.
(3) The Corporation shall not be required, in
connection with any conversion of shares of this Series
into Common Stock, to issue a fraction of a share of its
Common Stock, but in lieu thereof the Corporation shall,
subject to Section (D)(6)(e), make a cash payment
(calculated to the nearest cent -- five mills being
considered as nearer to the next highest cent) equal to
such fraction multiplied by the Closing Price of the Common
Stock on the last Trading Day prior to the date of
conversion.
(4) Any holder of shares of this Series electing
to convert such shares shall surrender the certificate or
certificates for such shares at the office of the Transfer
Agent therefor (or at such other place as the Corporation
may designate by notice to the holders of shares of this
Series) during regular business hours, duly endorsed to the
Corporation or in blank, or accompanied by instruments of
transfer to the Corporation or in blank, in form
satisfactory to the Corporation, and shall give written
notice to the Corporation at such office that such holder
elects to convert such shares of this Series. The
Corporation shall, as soon as practicable (subject to
Section (D)(6)(e) hereof) after such deposit of
certificates for shares of this Series, accompanied by the
written notice above prescribed and the payment of cash in
the amount required by Section (D)(2), issue and deliver at
such office to the holder for whose account such shares
were surrendered, or to his nominee, certificates
representing the number of new shares, and the cash, if
any, to which such holder is entitled upon such conversion.
(5) Conversion shall be deemed to have been made
as of the date of surrender of certificates for the shares
of this Series, to be converted, and the giving of written
notice and payment, as prescribed in Section (D)(2) and
(D)(4); and the person entitled to receive the new shares
issuable upon such conversion shall be treated for all
purposes as the record holder of such new shares on such
date. The Corporation shall not be required to deliver
certificates for such new shares while the stock transfer
books for such stock or for this Series are duly closed for
any purpose, but certificates for the new shares shall be
issued and delivered as soon as practicable after the
opening of such books.
(6) The conversion rate shall be adjusted from
time to time as follows:
(h) In case the Corporation shall, at any time
or from time to time while any of the Stock is outstanding,
(i) pay a dividend in shares of its Common Stock, (ii)
subdivide its outstanding shares of Common Stock, (iii)
combine its outstanding shares of Common Stock into a
smaller number of shares, or (iv) issue by reclassification
of its shares of Common Stock any shares of stock of the
Corporation, the conversion price and the conversion rate
in effect immediately prior to such action shall be
adjusted so that the holder of any shares of this Series
thereafter surrendered for conversion shall be entitled to
receive the number of shares of capital stock of the
Corporation which such holder would have owned or have been
entitled to receive immediately following such action had
such shares of this Series been converted immediately prior
thereto. An adjustment made pursuant to this Section
(D)(6)(a) shall become effective retroactively to
immediately after the opening of business on the day
following the record date in the case of a dividend or
distribution and shall become effective immediately after
the opening of business on the day following the effective
date in the case of subdivision, combination or
reclassification. If, as a result of an adjustment made
pursuant to this Section (D)(6)(a), the holder of any
shares of this Series thereafter surrendered for conversion
shall become entitled to receive shares of two or more
classes of capital stock of the Corporation, the Board of
Directors (whose determination shall be conclusive) shall
determine the allocation of the adjusted conversion price
and/or conversion rate between or among shares of such
classes of capital stock.
(i) In case the Corporation shall, at any time
or from time to time while any of the Stock is outstanding,
issue rights or warrants to all holders of shares of its
Common Stock entitling them to subscribe for or purchase
shares of Common Stock at a price per share less than the
current market price per share of Common Stock (as defined
in Section (D)(6)(d), at such record date, the conversion
rate shall be adjusted so that it shall equal the rate
determined by multiplying the conversion rate in effect
immediately prior to the date of issuance of such rights or
warrants by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding on the date of
issuance of such rights or warrants plus the number of
additional shares of Common Stock offered for subscription
or purchase, and the denominator of which shall be the
number of shares of Common Stock outstanding on the date of
issuance of such rights or warrants plus the number of
shares which the aggregate offering price of the total
number of shares so offered would purchase at such current
market price. Such adjustment shall become effective
retroactively immediately after the record date for the
determination of stockholders entitled to receive such
rights or warrants.
(j) In case the Corporation shall, at any time
or from time to time while any of the Stock is outstanding,
distribute to all holders of shares of its Common Stock,
evidences of its indebtedness or securities or assets
(excluding cash distributions payable out of consolidated
earnings or retained earnings, or dividends payable in
shares of Common Stock) or rights to subscribe (excluding
those referred to in (b)), then in each such case the
conversion rate shall be adjusted so that it shall equal
the rate determined by multiplying the conversion rate in
effect immediately prior to the date of such distribution
by a fraction, the numerator of which shall be the current
market price per share (determined as provided in Section
(D)(6)(d)) of the Common Stock on the record date referred
to below, and the denominator of which shall be such
current market price per share of the Common Stock less the
fair market value (as determined by the Board of Directors
of the Corporation, whose determination shall be
conclusive) of the portion of the assets or evidences of
indebtedness so distributed or of such subscription rights
or warrants applicable to one share of Common Stock. Such
adjustment shall become effective retroactively immediately
after the record date for the determination of stockholders
entitled to receive such distribution.
(k) For the purpose of any computation under
Section (D)(6)(b) and (D)(6)(c), the current market price
of a share of Common Stock on any date shall be the average
of the daily Closing Prices for 10 consecutive Business
Days before the day in question.
(l) The Corporation shall be entitled to make
such additional adjustments in the conversion price, in
addition to those required by subsections D(6)(a), D(6)(b)
and D(6)(c), as shall be necessary in order that any
dividend or distribution in shares of stock, subdivision,
reclassification or combination of shares of Common Stock,
issuance of rights or warrants, evidences of indebtedness
or assets (other than cash), referred to above, shall not
be taxable to the Shareholders.
(m) In any case in which this Section (D)(6)
shall require that an adjustment be made retroactively
immediately following a record date, the Corporation may
elect to defer (but only for five (5) Business Days
following the filing of the statement referred to in
Section (D)(6)(g)) issuing to the holder of any shares of
this Series converted after such record date (i) the shares
of Common Stock and other capital stock of the Corporation
issuable upon such conversion over and above (ii) the
shares of Common Stock and other capital stock of the
Corporation issuable upon such conversion on the basis of
the conversion rate prior to adjustment.
(n) Notwithstanding any other provisions of this
Section (D)(6), the Corporation shall not be required to
make any adjustment of the conversion rate unless such
adjustment would require an increase or decrease of at
least 1% in such rate. Any lesser adjustment shall be
carried forward and shall be made at the time of and
together with the next subsequent adjustment which,
together with any adjustment or adjustments so carried
forward, shall amount to an increase or decrease of at
least 1% in such rate.
(o) Whenever an adjustment in the conversion
rate is required, the Corporation shall forthwith place on
file with its Transfer Agent a statement signed by its
President or a Vice President and by its Secretary or
Treasurer or one of its Assistant Secretaries or Assistant
Treasurers, stating the adjusted conversion rate determined
as provided herein. Such statements shall set forth in
reasonable detail such facts as shall be necessary to show
the reason and the manner of computing such adjustment.
Promptly after the adjustment of the conversion rate, the
Corporation shall mail a notice thereof to each holder of
shares of this Series.
(p) The term "Common Stock" as used in this
Paragraph F means the Corporation's Common Stock, $1.00 par
value, as the same exists at the date of filing of the
Certificate of Designation relating to this Series or any
other class of stock resulting from successive changes or
reclassifications of such Common Stock consisting solely of
changes in par value, or from par value to no par value, or
from no par value to par value. In the event that at any
time as a result of an adjustment made pursuant to Section
(D)(6)(a), the holder of any share of this Series
thereafter surrendered for conversion shall become entitled
to receive any shares of the Corporation other than shares
of its Common Stock, the conversion rate of such other
shares so receivable upon conversion of any share shall be
subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions
with respect to Common Stock contained in subparagraphs (a)
through (g) of this Section (D)(6), and the provisions of
Section (D)(1) through (5) and (8) through (12) with
respect to the Common Stock shall apply on like or similar
terms to any such other shares.
(7) The Series A conversion rate shall be
adjusted from time to time as follows:
(a) In case the Corporation shall, at any time
or from time to time while any of the Stock is outstanding,
(i) pay a dividend in shares of its Series A Stock, (ii)
subdivide its outstanding shares of Series A Stock, (iii)
combine its outstanding shares of Series A Stock into a
smaller number of shares, or (iv) issue by reclassification
of its shares of Series A Stock any shares of stock of the
Corporation, the Series A conversion rate in effect
immediately prior to such action shall be adjusted so that
the holder of any shares of this Series thereafter
surrendered for conversion shall be entitled to receive the
number of shares of capital stock of the Corporation which
such holder would have owned or have been entitled to
receive immediately following such action had such shares
of this Series been converted immediately prior thereto.
An adjustment made pursuant to this Section (D)(7)(a) shall
become effective retroactively to immediately after the
opening of business on the day following the record date in
the case of a dividend or distribution and shall become
effective immediately after the opening of business on the
day following the effective date in the case of
subdivision, combination or reclassification. If, as a
result of an adjustment made pursuant to this Section
(D)(7)(a), the holder of any shares of this Series
thereafter surrendered for conversion shall become entitled
to receive shares of two or more classes of capital stock
of the Corporation, the Board of Directors (whose
determination shall be conclusive) shall determine the
allocation of the adjusted Series A conversion rate between
or among shares of such classes of capital stock.
(b) In case the Corporation shall, at any time
or from time to time while any of the Stock is outstanding,
issue rights or warrants to all holders of shares of its
Series A Stock entitling them to subscribe for or purchase
shares of Series A Stock at a price per share less than the
current market price per share of Series A Stock (as
defined in Section (D)(7)(d), at such record date, the
Series A conversion rate shall be adjusted so that it shall
equal the rate determined by multiplying the Series A
conversion rate in effect immediately prior to the date of
issuance of such rights or warrants by a fraction, the
numerator of which shall be the number of shares of Series
A Stock outstanding on the date of issuance of such rights
or warrants plus the number of additional shares of Series
A Stock offered for subscription or purchase, and the
denominator of which shall be the number of shares of
Series A Stock outstanding on the date of issuance of such
rights or warrants plus the number of shares which the
aggregate offering price of the total number of shares so
offered would purchase at such current market price. Such
adjustment shall become effective retroactively immediately
after the record date for the determination of stockholders
entitled to receive such rights or warrants.
(c) In case the Corporation shall, at any time
or from time to time while any of the Stock is outstanding,
distribute to all holders of shares of its Series A Stock,
evidences of its indebtedness or securities or assets
(excluding cash distributions payable out of consolidated
earnings or retained earnings, or dividends payable in
shares of Series A Stock) or rights to subscribe (excluding
those referred to in (b)), then in each such case the
Series A conversion rate shall be adjusted so that it shall
equal the rate determined by multiplying the Series A
conversion rate in effect immediately prior to the date of
such distribution by a fraction, the numerator of which
shall be the current market price per share (determined as
provided in Section (D)(7)(d)) of the Series A Stock on the
record date referred to below, and the denominator of which
shall be such current market price per share of the Series
A Stock less the fair market value (as determined by the
Board of Directors of the Corporation, whose determination
shall be conclusive) of the portion of the assets or
evidences of indebtedness so distributed or of such
subscription rights or warrants applicable to one share of
Series A Stock. Such adjustment shall become effective
retroactively immediately after the record date for the
determination of stockholders entitled to receive such
distribution.
(d) For the purpose of any computation under
Section (D)(7)(b) and (D)(7)(c), the current market price
of a share of Series A Stock on any date shall be the
average of the daily Closing Prices for 10 consecutive
Business Days before the day in question.
(e) The Corporation shall be entitled to make
such additional adjustments in the Series A conversion
rate, in addition to those required by subsections D(7)(a),
D(7)(b) and D(7)(c), as shall be necessary in order that
any dividend or distribution in shares of stock,
subdivision, reclassification or combination of shares of
Series A Stock, issuance of rights or warrants, evidences
of indebtedness or assets (other than cash), referred to
above, shall not be taxable to the Shareholders.
(f) In any case in which this Section (D)(7)
shall require that an adjustment be made retroactively
immediately following a record date, the Corporation may
elect to defer (but only for five (5) Business Days
following the filing of the statement referred to in
Section (D)(7)(g)) issuing to the holder of any shares of
this Series converted after such record date (i) the shares
of Series A Stock and other capital stock of the
Corporation issuable upon such conversion over and above
(ii) the shares of Series A Stock and other capital stock
of the Corporation issuable upon such conversion on the
basis of the Series A conversion rate prior to adjustment.
(g) Notwithstanding any other provisions of this
Section (D)(7), the Corporation shall not be required to
make any adjustment of the Series A conversion rate unless
such adjustment would require an increase or decrease of at
least 1% in such rate. Any lesser adjustment shall be
carried forward and shall be made at the time of and
together with the next subsequent adjustment which,
together with any adjustment or adjustments so carried
forward, shall amount to an increase or decrease of at
least 1% in such rate.
(h) Whenever an adjustment in the Series A
conversion rate is required, the Corporation shall
forthwith place on file with its Transfer Agent a statement
signed by its President or a Vice President and by its
Secretary or Treasurer or one of its Assistant Secretaries
or Assistant Treasurers, stating the adjusted Series A
conversion rate determined as provided herein. Such
statements shall set forth in reasonable detail such facts
as shall be necessary to show the reason and the manner of
computing such adjustment. Promptly after the adjustment
of the Series A conversion rate, the Corporation shall mail
a notice thereof to each holder of shares of this Series.
(8) In case of either (a) any consolidation or
merger to which the Corporation is a party, other than a
merger or consolidation in which the Corporation is the
surviving or continuing corporation and which does not
result in any reclassification of, or change (other than a
change in par value or from par value to no par value or
from no par value to par value, or as a result of a
subdivision or combination) in, outstanding shares of
Common Stock, or (b) any sale or conveyance to another
corporation of the property of the Corporation as an
entirety, then the Corporation, or such successor
corporation, as the case may be, shall make appropriate
provision so that the holder of each share of this Series
then outstanding shall have the right to convert such share
of this Series into the kind and amount of shares of stock
or other securities and property receivable upon such
consolidation, merger, sale or conveyance by a holder of
the number of shares of Common Stock into which such shares
of this Series might have been converted immediately prior
to such consolidation, merger, sale or conveyance, subject
to adjustments which shall be as nearly equivalent as may
be practicable to the adjustments provided for in this
Section (D). The provisions of this Section (D)(8) shall
apply similarly to successive consolidations, mergers,
sales or conveyances.
(9) Any shares of this Series which shall at any
time have been converted shall, after such conversion, have
the status of authorized but unissued shares of Preferred
Stock, without designation as to series until such shares
are once more designated as part of a particular series by
the Board of Directors. The Corporation shall at all times
reserve and keep available out of its authorized but
unissued stock, for the purpose of effecting the conversion
of the shares of this Series, such number of its duly
authorized shares of Common Stock and Series A Stock as
shall from time to time be sufficient to effect the
conversion of all outstanding shares of this Series;
provided, however, that nothing contained herein shall
preclude the Corporation from satisfying its obligations in
respect of the conversion of the shares by delivery of
purchased shares of Common Stock or Series A Stock, as the
case may be, which are held in the treasury of the
Corporation.
(10) If any shares of Common Stock or Series A
Stock required to be reserved for purposes of conversion of
shares of this Series hereunder require registration with
or approval of any governmental authority before such
shares may be issued upon conversion, the Corporation shall
cause such shares to be duly registered or approved, as the
case may be. The Corporation will endeavor to list the
shares of Common Stock or Series A Stock, as the case may
be, required to be delivered upon conversion of shares of
this Series prior to such delivery upon each national
securities exchange upon which the outstanding Common Stock
is listed at the time of such delivery.
(11) The Corporation shall pay any and all issue
or other taxes that may be payable in respect of any issue
or delivery of shares of Common Stock or Series A Stock, as
the case may be, on conversion of shares of this Series
pursuant hereto. The Corporation shall not, however, be
required to pay any tax which is payable in respect of any
transfer involved in the issue or delivery of Common Stock
or Series A Stock, as the case may be, in a name other than
that in which the shares of this Series so converted were
registered, and no such issue or delivery shall be made
unless and until the person requesting such issue has paid
to the Corporation the amount of such tax, or has
established, to the satisfaction of the Corporation, that
such tax has been paid.
(12) Before taking any action that would result
in the conversion price being less than the then par value
of the Common Stock, the Corporation shall take any
corporate action which may, in the opinion of its counsel,
be necessary in order that the Corporation may validly and
legally issue fully paid and nonassessable shares of Common
Stock at the conversion price.
(E) EXCHANGE FOR DEBENTURES
(1) The shares of this Series are exchangeable
in whole, but not in part, at the sole option of the
Corporation, at any time, on any Dividend Payment Date,
into the Corporation's 7 3/4% Convertible Subordinated
Debentures Due 2017 (the "Debentures") in the form attached
as Exhibit C to the Subscription Agreement, dated as of
February 7, 1992, between the Corporation and the
purchasers of the Preferred Stock (the "Subscription
Agreement"); provided, that on or prior to the date fixed
for exchange (the "Exchange Date") the Corporation shall
have paid to the holders of outstanding shares of this
Series and of Preferred Stock ranking on a parity with this
Series all accumulated and unpaid dividends to the Exchange
Date. Holders of outstanding shares of this Series shall
be entitled to receive $250 principal amount of Debentures
in exchange for each share of this Series held on the
Exchange Date.
(2) In the event the Corporation shall exchange
shares of this Series, notice of such exchange shall be
given by first class mail, postage prepaid, mailed not less
than thirty (30) nor more than sixty (60) days prior to the
Exchange Date, to each record holder of shares of this
Series, at such holder's address as the same appears on the
books of the Corporation. Each such notice shall state:
(a) the Exchange Date; (b) the place or places where
certificates for such shares are to be surrendered for
exchange into Debentures; (c) that dividends on the shares
to be exchanged will cease to accrue on the Exchange Date;
and (d) the conversion price of the shares to be redeemed,
the period within which conversion rights may be exercised
and the conversion rate at the time applicable.
(3) Notice having been mailed as aforesaid, from
and after the Exchange Date (unless the Corporation shall
default in issuing Debentures in exchange for shares of
this Series or in making the final dividend payment on the
Exchange Date), dividends on the shares of this Series
shall cease to accrue, such shares shall no longer be
deemed to be outstanding, and all rights of the holders
thereof as stockholders of the Corporation (except the
right to receive from the Corporation the Debentures) shall
cease. Upon surrender (in accordance with the notice
provided for above in Section (E)(2)) of the certificates
for any shares of this Series so exchanged (properly
endorsed or assigned for transfer, if the Board of
Directors shall so require and the notice shall so state),
such shares shall be exchanged by the Corporation into
Debentures as aforesaid.
(4) All shares of this Series which have been
exchanged shall, after such exchange, have the status of
authorized but unissued shares of Preferred Stock, without
designation as to series until such shares are once more
designated as part of a particular series by the Board of
Directors.
(F) VOTING
(1) The shares of this Series shall have the
following voting rights:
(a) If and whenever at any time or times
dividends payable on shares of this Series shall have been
in arrears and unpaid in an aggregate amount equal to or
exceeding the amount of dividends payable thereon for six
quarterly dividend periods, then the holders of shares of
this Series, together with the holders of any other series
of Preferred Stock as to which dividends are in arrears and
unpaid in an aggregate amount equal to or exceeding the
amount of dividends payable thereon for six quarterly
dividend periods, shall have the exclusive right, voting
separately as a class with such other series, to elect two
directors of the Corporation, such directors to be in
addition to the number of directors constituting the Board
of Directors immediately prior to the accrual of such
right, the remaining directors to be elected by the other
class or classes of stock entitled to vote therefor at each
meeting of stockholders held for the purpose of electing
directors.
(b) Such voting right may be exercised initially
either at a special meeting of the holders of the Preferred
Stock having such voting right, called as hereinafter
provided, or at any annual meeting of stockholders held for
the purpose of electing directors, and thereafter at each
such annual meeting until such time as all dividends
accumulated on the shares of this Series shall have been
paid in full, at which time such voting right and the term
of the directors elected pursuant to Section (F)(1)(a)
shall terminate, subject to revesting on the basis set
forth in Section (F)(1)(a).
(c) At any time when such voting right shall
have vested in holders of the Preferred Stock, and if such
right shall not already have been initially exercised, a
proper officer of the Corporation shall, upon the written
request of the record holders of 10% in number of shares of
Preferred Stock having such voting right then outstanding,
addressed to the Secretary of the Corporation, call a
special meeting of the holders of Preferred Stock having
such voting right and of any other class or classes of
stock having voting power with respect to the election of
such directors. Such meeting shall be held at the earliest
practicable date upon the notice required for annual
meetings of stockholders at the place for holding annual
meetings of stockholders of the Corporation or, if none, at
a place designated by the Board of Directors. If such
meeting is not called by the proper officers of the
Corporation within 30 days after the personal service of
such written request upon the Secretary of the Corporation,
or within 35 days after mailing the same within the United
States of America, by registered mail, addressed to the
Secretary of the Corporation at its principal office (such
mailing to be evidenced by the registry receipt issued by
the postal authorities), then the record holders of 10% in
number of shares of the Preferred Stock then outstanding
which would be entitled to vote at such meeting may
designate in writing one of their number to call such
meeting at the expense of the Corporation, and such meeting
may be called by such person so designated upon the notice
required for annual meetings of stockholders and shall be
held at the same place as is elsewhere provided for in this
Section (F)(1)(c) or such other place as is selected by
such designated stockholder. Any holder of the Preferred
Stock who would be entitled to vote at such meeting shall
have access to the stock books of the Corporation for the
purpose of causing a meeting of stockholders to be called
pursuant to the provisions of this Section (F)(1).
Notwithstanding the provisions of this Section (F)(1), no
such special meeting shall be called during a period within
90 days immediately preceding the date fixed for the next
annual meeting of stockholders.
(d) At any meeting held for the purpose of
electing directors at which the holders of the Preferred
Stock shall have the right to elect directors as provided
herein, the presence in person or by proxy of the holders
of fifty percent (50%) of the then outstanding shares of
Preferred Stock having such right shall be required and
shall be sufficient to constitute a quorum of such class
for the election of directors by such class. At any such
meeting or adjournment thereof (i) the absence of a quorum
of the holders of the Preferred Stock having such right
shall not prevent the election of directors other than
those to be elected by the holders of the Preferred Stock,
and the absence of a quorum or quorums of the holders of
capital stock entitled to elect such other directors shall
not prevent the election of directors to be elected by the
holders of the Preferred Stock entitled to elect such
directors and (ii) except as otherwise required by law, in
the absence of a quorum of the holders of any class of
stock entitled to vote for the election of directors, a
majority of the holders present in person or by proxy of
such class shall have the power to adjourn the meeting for
the election of directors which the holders of such class
are entitled to elect, from time to time, without notice
other than announcement at the meeting, until a quorum is
present.
(e) Any vacancy in the Board of Directors in
respect of a director elected by holders of Preferred Stock
pursuant to the voting right created under this Section
(F)(1) shall be filled by vote of the remaining director so
elected, or if there be no such remaining director, by the
holders of Preferred Stock entitled to elect such director
or directors at a special meeting called in accordance with
the procedures set forth in Section (F)(1)(c), or, if no
such special meeting is called, at the next annual meeting
of stockholders. Upon any termination of such voting
right, subject to the requirements of the Business
Corporation Law of New York, the term of office of all
directors elected by holders of Preferred Stock voting
separately as a class shall terminate.
(f) So long as any shares of this Series remain
outstanding, the Corporation shall not, either directly or
indirectly or through merger or consolidation with any
other corporation, without the affirmative vote at a
meeting or the written consent with or without a meeting of
the holders of at least 66 2/3% in number of shares of this
Series then outstanding, amend, alter or repeal any of the
provisions of this Paragraph F relating to this Series or
the Certificate of Incorporation of the Corporation, or
authorize any reclassification of the shares of this
Series, so as in any such case to affect adversely the
preferences, special rights or powers of the shares of this
Series.
(g) In exercising the voting rights set forth in
this Section (F)(l), each share of Preferred Stock entitled
to such voting right shall have equal voting power,
notwithstanding any greater or lesser general voting powers
of one or more series of Preferred Stock.
(2) No consent of holders of shares of this
Series shall be required for (i) the creation of any
indebtedness of any kind of the Corporation, (ii) the
authorization or issuance of any class of stock of the
Corporation subordinate to the shares of this Series as to
dividends and as to liquidation, dissolution or winding up
of the Corporation or (iii) subject to Section (F)(1)(f),
the issuance of any shares of Preferred Stock.
(G) LIQUIDATION RIGHTS
(1) Upon the dissolution, liquidation or winding
up of the Corporation, whether voluntary or involuntary,
the holders of the shares of this Series shall be entitled
to receive out of the assets of the Corporation available
for distribution to stockholders, before any payment or
distribution shall be made on the Common Stock or on any
other class of stock ranking junior to this Series as to
liquidation, the amount of $250 per share, plus all
accumulated and unpaid dividends to the date of final
distribution.
(2) Neither the sale, lease or exchange (for
cash, shares of stock, securities or other consideration)
of all or substantially all the property and assets of the
Corporation nor the merger or consolidation of the
Corporation into or with any other corporation or the
merger or consolidation of any other corporation into or
with the Corporation, shall be deemed to be a dissolution,
liquidation or winding up, voluntary or involuntary, for
the purposes of this Section (G).
(3) After the payment to the holders of the
shares of this Series of the full preferential amounts
provided for in this Section (G), the holders of this
Series as such shall have no right or claim to any of the
remaining assets of the Corporation.
(4) In the event the assets of the Corporation
available for distribution to the holders of shares of this
Series upon any dissolution, liquidation or winding up of
the Corporation, whether voluntary or involuntary, shall be
insufficient to pay in full all amounts to which such
holders are entitled pursuant to Section (G)(1), no such
distribution shall be made on account of any shares of any
other class or series of Preferred Stock ranking on a
parity with the shares of this Series upon such
dissolution, liquidation or winding up unless proportionate
distributive amounts shall be paid on account of the shares
of this Series, ratably, in proportion to the full
distributable amounts for which holders of all such parity
shares are respectively entitled upon such dissolution,
liquidation or winding up.
(H) PRIORITY
(1) For purposes of this Paragraph F, any stock
of any class or series of the Corporation shall be deemed
to rank:
(i) Prior to the shares of this Series,
either as to dividends or as to liquidation, if the
holders of such class or classes shall be entitled to
the receipt of dividends or of amounts distributable
upon dissolution, liquidation or winding up of the
Corporation, whether voluntary or involuntary, as the
case may be, in preference or priority to the holders
of shares of this Series;
(ii) On a parity with shares of this Series,
either as to dividends or as to liquidation, whether
or not the dividend rates, Dividend Payment Dates, or
redemption or liquidation prices per share or sinking
fund provisions, if any, are different from those of
this Series, if the holders of such stock are entitled
to the receipt of dividends or of amounts
distributable upon dissolution, liquidation or winding
up of the Corporation, whether voluntary or
involuntary, in proportion to their respective
dividend rates or liquidation prices, without
preference or priority, one over the other, as between
the holders of such stock and the holders of shares of
this Series; and
(iii) Junior to shares of this Series, either
as to dividends or as to liquidation, if such class or
series shall be Common Stock or if the holders of
shares of this Series shall be entitled to receipt of
dividends or of amounts distributable upon
dissolution, liquidation or winding up of the
Corporation, whether voluntary or involuntary, as the
case may be, in preference or priority to the holders
of shares of such class or series.
(2) The shares of this Series shall rank pari
passu with the Corporation's $19.375 Convertible
Exchangeable Preferred Stock.
FOURTH: The Office of the Corporation within the
State of New York shall be located in the County of New
York, City of New York.
FIFTH: The post office address to which the
Secretary of State shall mail a copy of any process against
the Corporation served upon him, is Arrow Electronics,
Inc., c/o Prentice Hall Corporation System Inc., 15
Columbus Circle, New York, New York 10023-7773.
SIXTH: The duration of the Corporation shall be
perpetual.
SEVENTH: The number of directors shall be no
less than three and no more than fifteen. Directors need
not be shareholders.
EIGHTH: The Secretary of State is designated as
the agent of the Corporation upon whom process in any
action or proceeding against it may be served within the
State of New York.
NINTH: The following provisions are inserted for
the regulation and conduct of the affairs of the
Corporation, and it is expressly provided that they are
intended to be in furtherance and not in limitation or
exclusion of the powers conferred by law:
No contract or other transaction between the
Corporation and any other firm or corporation shall be
affected or invalidated by reason of the fact that any one
or more of the directors or officers of this Corporation is
or are interested in, or is a member, stockholder,
director, or officer, or are members, stockholders,
directors, or officers of such other firm or corporation;
and any director or officer or officers, individually or
jointly, may be a party or parties to, or may be interested
in, any contract or transaction of this Corporation, or in
which this Corporation is interested, and no contract, act,
or transaction of this Corporation with any person or
persons, firm, association or corporation, shall be
affected or invalidated by reason of the fact that any
director or directors, officer or officers of this
Corporation is a party or are parties to, or interested in,
such contract, act or transaction, or in any way connected
with such person or persons, firm, association or
corporation, and each and every person who may become a
director or officer of this Corporation is relieved from
any liability that might otherwise exist from thus
contracting with this Corporation for the benefit of
himself or any firm, association or corporation in which he
may be in anywise interested.
Subject to such restrictions and regulations
contained in By-Laws adopted by the stockholders, the Board
of Directors may make, alter, amend and rescind the By-
laws, and may provide therein for the appointment of an
executive committee from their own members, to exercise all
or any of the powers of the Board, which may lawfully be
delegated when not in session. The By-Laws may be amended
or repealed, at any time, by the stockholders.
The Board of Directors shall have power, in its
discretion, to provide for and to pay to directors
rendering unusual or exceptional services to the
Corporation, special compensation appropriate to the value
of such services.
By resolution duly adopted by the holders of not
less than a majority of the shares of stock then issued and
outstanding and entitled to vote at any regular or special
meeting of the stockholders of the Corporation duly called
and held as provided in the By-Laws of the Corporation, any
director or directors of the Corporation may be removed
from office at any time or times, with our without cause.
The Board of Directors may at any time remove any officer
of the Corporation with or without cause.
Any person made a party to any action, suit or
proceeding by reason of the fact that he, is testator or
intestate, is or was a director, officer or employee of the
Corporation or of any corporation which he served as such
at the request of the Corporation shall be indemnified by
the Corporation against the reasonable expenses, including
attorney's fees, actually and necessarily incurred by him
in connection with the defense of such action, suit or
proceedings, or in connection with any appeal therein,
except in relation to matters as to which it shall be
adjudged in such action, suit or proceeding that such
officer, director or employee is liable for negligence or
misconduct in the performance of his duties. The foregoing
right or indemnification shall not be deemed exclusive of
any other rights to which any officer or director or
employee may be entitled apart from the provisions of this
section.
The Corporation may use and apply its surplus
earnings or accumulated profits, not otherwise by law to be
reserved, to the purchase or acquisition of property and to
the purchase or acquisition of its own capital stock from
time to time and to such extent and in such manner and upon
such terms as its Board of Directors shall determine; and
neither the property nor the capital stock so purchased or
acquired, nor any of its own capital stock taken in payment
of satisfaction of any debt due to the Corporation, shall
be regarded as profits for the purpose of declaration or
payment of dividends, unless otherwise determined by a
majority of the Board of Directors.
A director of this Corporation shall not be
personally liable to the Corporation or its shareholders
for damages for any breach of fiduciary duty as a director,
except for liability resulting from a judgment or other
final adjudication adverse to the director: (i) for acts
or omissions in bad faith or which involve intentional
misconduct or a knowing violation of the law, (ii) for any
transaction from which the director derived a financial
profit or other advantage to which the director was not
legally entitled, or (iii) under Section 719 of the New
York Business Corporation Law.
TENTH: A. 1. In addition to any affirmative
vote required by law or under any other provision of this
Certificate of Incorporation, and except as otherwise
expressly provided in Paragraph B:
(i) any merger or consolidation of the
Corporation or any Subsidiary (as hereinafter defined)
with or into (A) any 30% Shareholder (as hereinafter
defined) or (B) any other corporation (whether or not
itself a 30% Shareholder) which, after such merger or
consolidation, would be an Affiliate (as hereinafter
defined) of a 30% Shareholder, or
(ii) any sale, lease, exchange, mortgage,
pledge, transfer or other disposition (in one
transaction or a series of related transactions) to or
with any 30% Shareholder of any assets of the
Corporation or any Subsidiary having an aggregate fair
market value of $5,000,000 or more, or
(iii) the issuance or transfer by the
Corporation or any Subsidiary (in one transaction or a
series of related transactions) of any securities of
the Corporation or any Subsidiary to any 30%
Shareholder in exchange for cash, securities or other
property (or a combination thereof) having an
aggregate fair market value of $5,000,000 or more,
provided, however, that this clause (iii) shall not be
applicable to any issuance or transfer to a 30%
Shareholder if the acquisition of the 30% Interest (as
hereinafter defined) by such 30% Shareholder was
approved by the Board of Directors of the Corporation
prior to the time that such 30% Shareholder became a
30% Shareholder and such 30% Shareholder is entitled
to acquire such shares pursuant to an agreement
approved by a majority of the continuing directors, or
(iv) any reclassification of securities
(including any reverse stock split), recapitalization,
reorganization or any similar transaction designed to
reduce materially, or having the effect of reducing
materially, the percentage of the outstanding shares
of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for
the purpose of this Article TENTH as one class
("Voting Shares"), which are held by the holders
("Public Holders") of Voting Shares other than any 30%
Shareholder,
shall require the affirmative vote of the holders of at
least 90% of the Voting Shares. Such affirmative vote
shall be required notwithstanding the fact that no vote may
be required, or that some lesser percentage may be
specified, by law or in any agreement with any national
securities exchange or otherwise.
2. The term "business combination" as used in
this Article TENTH shall mean any transaction which is
referred to in any one or more of clauses (i) through (iv)
of subparagraph 1 of this Paragraph A.
B. The provisions of Paragraph A of this Article
TENTH shall not be applicable to any particular business
combination, and such business combination shall require
only such affirmative vote as is required by law and any
other provision of this Certificate of Incorporation, if
all of the following conditions shall have been satisfied:
1. The ratio of:
(a) the aggregate amount of the cash and the fair
market value of other consideration to be received per
share by holders of common stock of the Corporation
("Common Stock") in such business combination,
(b) the market price of the Common Stock
immediately prior to the announcement of such business
combination, is at least as great as the ratio of
(i) the highest per share price
(including brokerage commissions, transfer taxes
and soliciting dealers' fees) which such 30%
Shareholder has theretofore paid for any shares
of Common Stock already owned by it, to
(ii) the market price of the Common
Stock immediately prior to the initial
acquisition by such 30% Shareholder of any Common
Stock; and
2. The aggregate amount of the cash and fair
market value of other consideration to be received per
share by holders of Common Stock in such business
combination
(i) is not less than the highest per share
price (including brokerage commissions, transfer taxes
and soliciting dealers' fees) paid by such 30%
Shareholder in acquiring any of its holdings of Common
Stock, and
(ii) is not less than the earnings per share
of Common Stock for the four full consecutive fiscal
quarters immediately preceding the record date for
solicitation of votes on such business combination
multiplied by the then price/earnings multiple (if
any) of such 30% Shareholder as customarily computed
and reported in the financial community; and
3. The consideration to be received by holders
of Common Stock in such business combination shall be in
the same form and of the same kind as the consideration
paid by the 30% Shareholder in acquiring the shares of
Common Stock already owned by it; and
4. After such 30% Shareholder has acquired
ownership of not less than 30% of the then outstanding
Voting Shares (a "30% Interest") and prior to the
consummation of such business combination:
(i) the 30% Shareholder shall have taken
steps to ensure that the Corporation's Board of
Directors include at all times representation by
continuing director(s) (as hereinafter defined)
proportionate to the ratio that the Voting Shares
which from time to time are not owned by any 30%
Shareholder bear to all Voting Shares outstanding at
such respective times (with a continuing director to
occupy any resulting fractional board position);
(ii) there shall have been no reduction in
the rate of dividends payable on the Common Stock
except as necessary to ensure that a quarterly
dividend payment does not exceed 15% of the net income
of the Corporation for the four full consecutive
fiscal quarters immediately preceding the declaration
date of such dividend, or except as may have been
approved by a unanimous vote of all directors which
the Corporation would have if there were no vacancies
(the "whole Board");
(iii) such 30% Shareholder shall not have
acquired any newly issued shares of stock, directly or
indirectly, from the Corporation (except upon
conversion of convertible securities acquired by it
prior to obtaining a 30% Interest or as a result of a
pro rata stock dividend or stock split); and
(iv) such 30% Shareholder shall not have
acquired any additional shares of the Corporation's
outstanding Common Stock or securities convertible
into or exchangeable for Common Stock except as a part
of the transaction which resulted in such 30%
Shareholder acquiring its 30% interest; and
5. Prior to the consummation of such business
combination, such 30% Shareholder shall not have (i)
received the benefit, directly or indirectly (except
proportionately as a shareholder), of any loans, advances,
guarantees, pledges or other financial assistance or tax
credits provided by the Corporation, or (ii) made any major
changes in the Corporation's business or equity capital
structure without the unanimous approval of the whole
Board; and
6. A proxy statement responsive to the
requirements of the Securities Exchange Act of 1934 shall
have been mailed to all holders of Voting Shares for the
purpose of soliciting shareholder approval of such business
combination. Such proxy statement shall contain at the
front thereof, in a prominent place, any recommendations as
to the advisability (or inadvisability) of the business
combination which the continuing directors, or any of them,
may have furnished in writing and, if deemed advisable by a
majority of the continuing directors, an opinion of a
reputable investment banking firm as to the fairness (or
lack of fairness) of the terms of such business
combination, from the point of view of the Public Holders
(such investment banking firm to be selected by a majority
of the continuing directors, to be furnished with all
information it reasonably requests and to be paid a
reasonable fee for its services upon receipt by the
Corporation of such opinion).
C. For the purposes of this Article TENTH:
1. A "person" shall mean any individual, firm,
corporation or other entity.
2. "30% Shareholder" shall mean, in respect of
any business combination, any person (other than the
Corporation) who or which, as of the record date for the
determination of shareholders entitled to notice of and to
vote on such business combination,
(a) is the beneficial owner, directly or
indirectly, of not less than 30% of the Voting Shares,
or
(b) is an Affiliate of the Corporation and at any
time prior thereto was the beneficial owner, directly
or indirectly, of not less than 30% of the then
outstanding Voting Shares, or
(c) is an assignee of or has otherwise succeeded
to any shares of capital stock of the Corporation
which were at any time prior thereto beneficially
owned by any 30% Shareholder, and such assignment or
succession shall have occurred in the course of a
transaction or series of transactions not involving a
public offering within the meaning of the Securities
Act of 1933, provided, however, that this clause (c)
shall not be applicable to any assignment or
succession of shares of capital stock that were
previously owned by any 30% Shareholder if the
acquisition of the 30% Interest by each 30%
Shareholder that previously owned any of such shares
was approved by the Board of Directors of the
Corporation prior to the time that such 30%
Shareholder became a 30% Shareholder and each
assignment or succession of such shares from such a
30% Shareholder is in accordance with an agreement
between such 30% Shareholder and the Corporation
approved by a majority of the continuing directors
that permits such an assignment or succession.
3. A person shall be the "beneficial owner" of
any Voting Shares:
(a) which such person or any of its Affiliates
or Associates (as hereinafter defined) beneficially
owns, directly or indirectly, or
(b) which such person or any of its Affiliates or
Associates has (i) the right to acquire (whether such
right is exercisable immediately or only after the
passage of time) pursuant to any agreement,
arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants, or
options, or otherwise, or (ii) the right to vote
pursuant to any agreement, arrangement or
understanding, or
(c) which are beneficially owned, directly or
indirectly, by any other person with which such first
mentioned person or any of its Affiliates or
Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding,
voting or disposing of any shares of capital stock of
the Corporation.
4. The outstanding Voting Shares shall include
shares deemed owned through application of subparagraph 3
above but shall not include any other Voting Shares which
may be issuable pursuant to any agreement, or upon exercise
of conversion rights, warrants or options, or otherwise.
5. "Continuing director" shall mean a person who
was a member of the Board of Directors of the Corporation
elected by the Public Holders prior to the date as of which
any 30% Shareholder acquired in excess of 10% of the then
outstanding Voting Shares, or a person designated (before
his initial election as a director) as a continuing
director by a majority of the then continuing directors.
6. "Other consideration to be received" shall
mean Common Stock of the Corporation retained by its Public
Holders in the event of a business combination in which the
Corporation is the surviving corporation.
7. "Affiliate" and "Associate" shall have the
respective meanings given those terms in Rule 12b-2 of the
General Rules and Regulations under the Securities Exchange
Act of 1934, as in effect on January 1, 1978.
8. "Subsidiary" means any corporation of which a
majority of any class of equity security (as defined in
Rule 3a11-l of the General Rules and Regulations under the
Securities Exchange Act of 1934, as in effect on January 1,
1978) is owned, directly or indirectly, by the Corporation.
D. A majority of the continuing directors shall
have the power and duty to determine for the purposes of
this Article TENTH, on the basis of information known to
them, (a) the number of Voting Shares beneficially owned by
any person, (b) whether a person is an Affiliate or
Associate of another, (c) whether a person has an
agreement, arrangement or understanding with another as to
the matters referred to in subparagraph 3 of Paragraph C,
or (d) whether the assets subject to any business
combination have an aggregate fair market value of
$5,000,000 or more.
E. Any amendment, alteration, change or repeal
of this Article TENTH of this Certificate of Incorporation
shall require the affirmative vote of the holders of at
least 90% of the then outstanding Voting Shares; provided,
however, that this Paragraph E shall not apply to, and such
90% vote shall not be required for, any amendment,
alteration, change or repeal unanimously recommended to the
shareholders by the whole Board if all members of the whole
Board are continuing directors.
F. Nothing contained in this Article TENTH shall
be construed to relieve any 30% Shareholder from any
fiduciary obligation imposed by law.
4. The restatement hereinabove set forth was
authorized by the Board of Directors of the Corporation at
a meeting duly held on October 23, 1991.
IN WITNESS WHEREOF, we have signed this
certificate and affirm the statements contained therein as
true under penalties of perjury.
Dated: October 23, 1991
s/ROBERT E. KLATELL
Robert E. Klatell,
Senior Vice President
s/WAYNE BRODY
Wayne Brody,
Assistant Secretary<PAGE>
CERTIFICATE OF AMENDMENT
OF THE CERTIFICATE OF INCORPORATION
OF
ARROW ELECTRONICS, INC.
UNDER SECTION 805 OF THE BUSINESS CORPORATION LAW
CONFORMED COPY
AS AMENDED THROUGH NOVEMBER 28, 1994
WINTHROP, STIMSON, PUTNAM & ROBERTS
ONE BATTERY PARK PLAZA
NEW YORK, NEW YORK 10004-1490
Exhibit 10(b)(vii)
SUPPLEMENT NO. 4
ARROW ELECTRONICS SAVINGS PLAN
In connection with the acquisition by Arrow Electronics,
Inc. of all of the issued and outstanding shares of common stock of
Gates/FA Distributing, Inc. (the "Gates Acquisition"), the Plan is
amended as follows:
S4.1 In the case of an individual who becomes an
employee of an Employer or Affiliate on or about November 7, 1994
in connection with the Gates Acquisition, service with Gates/FA
Distributing, Inc. shall be treated, for purposes of Section 2.1 and for
purposes of determining such individual's Years of Service under the
Plan, as though it were service with an Employer or Affiliate. For this
purpose, any service measured in terms of elapsed time shall be
converted to Hours of Service on the basis that one month equals
190 Hours of Service, one week equals 45 Hours of Service and one
day equals 10 hours of Service.
December 28, 1994
Exhibit 10(b)(xv)
SUPPLEMENT NO. 4
ARROW ELECTRONICS STOCK OWNERSHIP PLAN
In connection with the acquisition by Arrow Electronics,
Inc. of all of the issued and outstanding shares of common stock of
Gates/FA Distributing, Inc. (the "Gates Acquisition"), the Plan is
amended as follows:
S4.1 In the case of an individual who becomes an
employee of an Employer or Affiliate on or about November 7, 1994
in connection with the Gates Acquisition, service with Gates/FA
Distributing, Inc. shall be treated, for purposes of Section 2.1 and for
purposes of determining such individual's Years of Service under the
Plan, as though it were service with an Employer or Affiliate. For this
purpose, any service measured in terms of elapsed time shall be
converted to Hours of Service on the basis that one month equals
190 Hours of Service, one week equals 45 Hours of Service and one
day equals 10 hours of Service.
December 28, 1994
Exhibit 10(b)(xix)
SUPPLEMENT NO. 3
CAPSTONE ELECTRONICS PROFIT SHARING PLAN
In connection with the acquisition by Arrow Electronics,
Inc. of all of the issued and outstanding shares of common stock of
Gates/FA Distributing, Inc. (the "Gates Acquisition"), the Plan is
amended as follows:
S3.1 In the case of an individual who becomes an
employee of an Employer or Affiliate on or about November 7, 1994
in connection with the Gates Acquisition, service with Gates/FA
Distributing, Inc. shall be treated, for purposes of Section 2.1 and for
purposes of determining such individual's Years of Service under the
Plan, as though it were service with an Employer or Affiliate. For this
purpose, any service measured in terms of elapsed time shall be
converted to Hours of Service on the basis that one month equals
190 Hours of Service, one week equals 45 Hours of Service and one
day equals 10 hours of Service.
December 28, 1994
EXHIBIT 10(c)(ii)
EMPLOYMENT AGREEMENT made as of the 22nd day of February, 1995 by and
between ARROW ELECTRONICS, INC., a New York corporation with its principal
office at 25 Hub Drive, Melville, New York 11747 (the "Company"), and STEPHEN
P. KAUFMAN, residing at 101 Lloyd Harbour Road, Huntington, New York 11743 (the
"Executive").
WHEREAS, the Executive is now and has been employed by the Company as
its Chairman and Chief Executive Officer, with the responsibilities and duties
of a principal executive officer of the Company;
WHEREAS, the Company and the Executive wish to provide for the
continued employment of the Executive as an employee of the Company and for him
to continue to render services to the Company on the terms set forth in, and in
accordance with the provisions of, this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties agree as follows:
1. Employment and Duties.
a) Employment. The Company hereby employs the Executive for the
Employment Period defined in Paragraph 3, to perform such duties for the
Company, its subsidiaries and affiliates and to hold such offices as may be
specified from time to time by the Company's Board of Directors, subject to the
following provisions of this Agreement. The Executive hereby accepts such
employment.
b) Duties and Responsibilities through June 30, 1998. During the
Initial Period (as defined in Paragraph 3), it is contemplated that the
Executive will be the Chairman and Chief Executive Officer of the Company but
the Board of Directors shall have the right to adjust the duties,
responsibilities and title of the Executive as the Board of Directors may from
time to time deem to be in the interests of the Company (provided, however,
that they remain commensurate with his duties and responsibilities as they
exist on the date hereof). If the Board of Directors does not either continue
the Executive in the office of Chairman and Chief Executive Officer or elect
him to some other principal executive office satisfactory to the Executive, the
Executive shall have the right to decline to give further service to the
Company and shall have the rights and obligations which would accrue to him
under Paragraph 8 if he were discharged without cause. If the Executive
decides to exercise such right to decline to give further service, he shall
within thirty days after such action or omission by the Board of Directors give
written notice to the Company stating his objection and the action he thinks
necessary to correct it, and he shall permit the Company to have a thirty day
period in which to correct its action or omission. If the Company makes a
correction satisfactory to the Executive, the Executive shall be obligated to
continue to serve the Company. If the Company does not make such a correction,
the Executive's rights and obligations under Paragraph 8 shall accrue at the
expiration of such thirty day period.
<PAGE>
c) Duties and Responsibilities from July 1, 1998 to December 31,
2001. During the Transition Period (as defined in Paragraph 3), the Executive
shall remain an employee of the Company and shall hold himself available to
assist the Company on mutually-agreed projects involving significant matters
similar to those with respect to which he has been involved on the Company's
behalf at the close of the Initial Period.
d) Time Devoted to Duties. During the Initial Period, the
Executive shall devote substantially all of his normal business time and
efforts to the business of the Company, its subsidiaries and its affiliates,
the amount of such time to be sufficient, in his discretion, to permit him
diligently and faithfully to serve and endeavor to further their interests to
the best of his ability. Subject to the foregoing, it is expressly agreed and
understood that the Executive may participate in various civic and
philanthropic activities, may serve on boards of directors and committees of
not-for-profit organizations of the Executive's choice, and, consistent with
the policies of the Company, may serve as a member of one or more corporate
boards of directors (unless the Company's Board of Directors concludes that
such service would be inappropriate or not in the best interests of the
Company). During the Transition Period, the Executive shall devote such time
to the business of the Company as may be reasonably required by the Company in
light of his modified duties, but not to exceed 50% of his normal time
commitment during the Initial Period.
e) Location of Office. The Company shall not require the
Executive to locate his office more than fifty miles from his then current
residence address, without his prior written consent.
2. Compensation.
a) Monetary Remuneration and Benefits through June 30, 1998.
During the Initial Period, the Company shall pay to the Executive for all
services rendered by him in any capacity:
i. commencing January 1, 1995, a minimum base salary of
$650,000 per year (payable in accordance with the Company's then
prevailing practices, but in no event less frequently than in equal
monthly installments), subject to increase from time to time in the
sole discretion of the Board of Directors of the Company, except that
such salary shall be increased annually by a percentage at least equal
to the average percentage increase granted to all salaried employees
of the Company; and provided further that, should the Company
institute a company-wide pay cut/furlough program, such salary may be
decreased by up to 15%, but only for as long as said company-wide
program is in effect;
ii. such additional compensation by way of salary or
bonus or fringe benefits as the Board of Directors of the Company in
its sole discretion shall authorize or agree to pay, payable on such
terms and conditions as it shall determine; and
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<PAGE>
iii. such employee benefits that are made available by the
Company to its other principal executives.
b) Monetary Remuneration and Benefits from July 1, 1998 to
December 31, 2001. During the Transition Period, the Company shall pay to the
Executive for all services rendered by him in any capacity:
i. a base salary of not less than $400,000 per year
(payable in accordance with the Company's then-prevailing practices,
but in no event less frequently than in equal monthly installments);
and
ii. such employee benefits that are made available by the
Company to its other principal executives.
c) Performance Bonus Plan. The Executive shall participate in
the Company's Chief Executive Officer Performance Bonus Plan (the "Plan") until
the Plan is terminated or June 30, 1998, whichever occurs first.
d) Supplemental Executive Retirement Plan. The Executive shall
continue to participate in the Company's Unfunded Pension Plan for Selected
Executives, which shall provide him with a minimum benefit of $300,000 per year
at the normal retirement age of 60.
e) Vacation. During the Employment Period, the Executive will be
given four weeks' vacation with full pay each year, to be taken at the
Executive's discretion; provided, however, that the Executive will use his best
efforts to ensure that such vacation does not unduly interfere with the
operation and performance of the business of the Company, its subsidiaries or
its affiliates.
f) Expenses. During the Employment Period, the Company agrees to
reimburse the Executive, upon the submission of appropriate vouchers, for
out-of-pocket expenses (including, without limitation, expenses for travel,
lodging and entertainment) incurred by the Executive in the course of his
duties hereunder.
g) Office and Staff. The Company will provide the Executive with
an office, secretary and such other facilities as may be reasonably required
for the proper discharge of his duties hereunder. From July 1, 1998 to
December 31, 2001 said office and secretarial support shall be provided in the
city of the Executive's principal residence.
h) Indemnification. The Company agrees to indemnify the
Executive for any and all liabilities to which he may be subject as a result of
his employment hereunder (and as a result of his service as an officer or
director of the Company, or as an officer or director of any of its
subsidiaries or affiliates), as well as the costs of any legal action brought
or threatened against him as a result of such employment, to the fullest extent
permitted by law.
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<PAGE>
i) Participation in Plans. Notwithstanding any other provision
of this Agreement, the Executive shall have the right to participate in any
and all of the plans or programs made available by the Company (or its
subsidiaries, divisions or affiliates) to, or for the benefit of, executives
(including, during the Initial Period, the annual stock option and restricted
stock grant programs) or employees in general, on a basis consistent with other
senior executives.
3. The Employment Period.
The "Employment Period", as used in the Agreement, shall mean the
period beginning as of the date hereof and terminating on the last day of the
calendar month in which the first of the following occurs:
a) the death of the Executive;
b) the disability of the Executive as determined in accordance
with Paragraph 4 hereof and subject to the provisions thereof;
c) the termination of the Executive's employment by the Company
for cause in accordance with Paragraph 6 hereof; or
d) December 31, 2001.
The Executive shall have the right to terminate the Employment period on six
months' written notice to the Company upon the happening of any of the
following events if such event has not been approved by the Board of Directors
of the Company:
1) a merger or consolidation with another corporation;
2) a sale of all or substantially all the assets of the Company; or
3) acquisition of more than fifty percent of the voting stock of the
Company by another entity, individual or united group.
If the Executive exercises such right, the Employment Period shall terminate on
the date specified in his notice to the Company provided the date is six months
or more after the date such notice is given.
The portion of the Employment Period ending June 30, 1998 is herein called the
"Initial Period", and the portion of the Employment Period after June 30, 1998
is herein called the "Transition Period."
4. Disability.
The Company has a disability benefit program now in effect for certain
of its executive employees including the Executive. During the Employment
Period the Company will continue to maintain in effect for the Executive such
benefit program or one granting
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<PAGE>
benefits to the Executive at least equal to those provided by the current
Disability Income Agreement dated November 1, 1982 between the Company and the
Executive entered into pursuant to such program. If at any time during the
Employment Period the Executive shall become disabled as defined under the
terms of the disability benefit program applicable to the Executive, the
Employment Period shall terminate on the last day of the month in which such
disability is determined. Until such termination of the Employment Period, the
Company shall continue to pay to the Executive, until the commencement of the
disability payments, his base salary and any additional compensation authorized
by the Company's Board of Directors, and shall continue during such interim
period to provide the Executive with the remuneration and benefits provided for
in accordance with Paragraph 2 hereof and the insurance required by Paragraph 7
hereof, all without delay, diminution or proration of any kind whatsoever. In
the event that, notwithstanding such a determination of disability, the
Executive is determined not to be totally and permanently disabled and such
disability payments cease prior to December 31, 2001, the Executive shall be
entitled to resume employment with the Company under the terms of this
agreement for the then remaining balance of the Employment Period.
5. Parachute Payments.
There is currently an agreement between the Executive and the Company
dated June 1, 1988 relating to the rights of the parties in the event of a
"change of control" of the Company as therein defined, which is comparable to
similar agreements between the Company and certain other principal executive
officers. At no time during the Employment Period shall the terms and
conditions applicable to the Executive in the event of a change of control
(including the basis on which the Executive may become entitled to compensation
or benefits in connection with such a change) be less favorable than the most
favorable terms and conditions applicable to any other principal executive
officer of the Company.
6. Termination for Cause.
In the event of any malfeasance, willful misconduct, active fraud or
gross negligence by the Executive in connection with his employment hereunder,
the Company shall have the right to terminate the Employment Period by giving
the Executive notice in writing of the reason for such proposed termination.
If the Executive shall not have corrected such conduct to the satisfaction of
the Company within thirty days after such notice, the Employment Period shall
terminate and the Company shall have no further obligation to the Executive
hereunder but the restriction on the Executive's activities contained in
Paragraph 9 and the obligations of the Executive contained in Paragraph 10(b)
and 10(c) shall continue in effect as provided therein.
7. Death Benefit.
The Executive is a participant in the Company's Management Insurance
Program. During the Employment Period, the Company will continue to maintain
in effect for the Executive such program or some other form of life insurance
providing the Executive's estate or named beneficiary a benefit upon the
Executive's death at least equal to the net after-tax benefit provided by the
Management Insurance Program.
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<PAGE>
8. Termination Without Cause.
In the event that the Company discharges the Executive without cause,
the Executive shall be entitled to the salary provided in Paragraph 2, the full
vesting of any restricted stock awards and the immediate exercisability of any
stock options, as well as his rights under Paragraphs 4 and 7, for the full
Employment Period (which, in that event, shall continue until December 31, 2001
unless sooner terminated by the Executive's disability or death), and the
Company shall have no right to set off payments due the Executive with any
amounts he may earn from gainful employment elsewhere. It is expressly agreed
and understood that the Executive shall be under no obligation to seek such
employment. The provisions of Paragraph 9 restricting the Executive's
activities and Executive's obligations under Paragraph 10(b) and 10(c) shall
continue in effect. The provisions of this Paragraph 8 shall not act to limit
the Executive's ability to recover damages from the Company for breaching this
agreement by terminating the Employment Agreement without cause, except as
otherwise permitted by Paragraph 3.
9. Non-Competition Trade Secrets.
During the Employment Period and for a period of two years after the
termination of the Employment Period, the Executive will not, directly or
indirectly:
a) Disclosure of Information. Use, attempt to use, disclose or
otherwise make known to any person or entity (other than to the Board of
Directors of the Company or otherwise in the course of the business of the
Company, its subsidiaries or affiliates and except as may be required by
applicable law):
i. any knowledge or information, including, without
limitation, lists of customers or suppliers, trade secrets, know-how,
inventions, discoveries, processes and formulae, as well as all data
and records pertaining thereto, which he may acquire in the course of
his employment, in any manner which may be detrimental to or cause
injury or loss to the Company, its subsidiaries or affiliates; or
ii. any knowledge or information of a confidential nature
(including all unpublished matters) relating to, without limitation,
the business, properties, accounting, books and records, trade secrets
or memoranda of the Company, its subsidiaries or affiliates, which he
now knows or may come to know in any manner which may be detrimental
to or cause injury or loss to the Company its subsidiaries or
affiliates.
b) Non-Competition. Engage or become interested in the United
States, Canada or Mexico (whether as an owner, shareholder, partner, lender or
other investor, director, officer, employee, consultant or otherwise) in the
business of distributing electronic parts, components, supplies or systems, or
any other business that is competitive with the principal business or
businesses then conducted by the Company, its subsidiaries or affiliates
(provided, however, that nothing contained herein shall prevent the Executive
from acquiring or owning less than 1% of the issued and outstanding capital
stock or debentures of a
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<PAGE>
corporation whose securities are listed on the New York Stock Exchange,
American Stock Exchange, or the National Association of Securities Dealers
Automated Quotation System, if such investment is otherwise permitted by the
Company's Human Resource and Conflict of Interest policies);
c) Solicitation. Solicit or participate in the solicitation of
any business of any type conducted by the Company, its subsidiaries or
affiliates, during said term or thereafter, from any person, firm or other
entity which was or at the time is a supplier or customer, or prospective
supplier or customer, of the Company, its subsidiaries or affiliates; or
d) Employment. Employ or retain, or arrange to have any other
person, firm or other entity employ or retain, or otherwise participate in the
employment or retention of, any person who was an employee or consultant of the
Company, its subsidiaries or affiliates, at any time during the period of
twelve consecutive months immediately preceding such employment or retention.
The Executive will promptly furnish in writing to the Company, its
subsidiaries or affiliates, any information reasonably requested by the Company
(including any third party confirmations) with respect to any activity or
interest the Executive may have in any business.
Except as expressly herein provided, nothing contained herein is
intended to prevent the Executive, at any time after the termination of the
Employment Period, from either (i) being gainfully employed or (ii) exercising
his skills and abilities outside of such geographic areas, provided in either
case the provisions of this Agreement are complied with.
10. Preservation of Business.
a) General. During the Employment Period and subject to
Paragraph 1(c) hereof, the Executive will use his best efforts to advance the
business and organization of the Company, its subsidiaries and affiliates, to
keep available to the Company, its subsidiaries and affiliates, the services of
present and future employees and to advance the business relations with its
suppliers, distributors, customers and others.
b) Patents and Copyrights etc. The Executive agrees, without
additional compensation, to make available to the Company all knowledge
possessed by him relating to any methods, developments, inventions, processes,
discoveries and/or improvements (whether patented, patentable or unpatentable)
which concern in any way the business of the Company, its subsidiaries or
affiliates, whether acquired by the Executive before or during his employment
or retention hereunder.
Any methods, developments, inventions, processes, discoveries and/or
improvements (whether patented, patentable or unpatentable) which the Executive
may conceive of or make, related directly or indirectly to the business or
affairs of the Company, its subsidiaries or affiliates, or any part thereof,
during the Employment Period, shall be and remain the property of the Company.
The Executive agrees promptly to communicate and disclose all such methods,
developments, inventions, processes discoveries and/or
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<PAGE>
improvements to the Company and to execute and deliver to it any instruments
deemed necessary by the Company to effect the disclosure and assignment thereof
to it. The Executive also agrees, on request and at the expense of the
Company, to execute patent applications and any other instruments deemed
necessary by the Company for the prosecution of such patent applications or the
acquisition of Letters Patent in the United States or any other country and for
the assignment to the Company of any patents which may be issued. The Company
shall indemnify and hold the Executive harmless from any and all costs,
expenses, liabilities or damages sustained by the Executive by reason of having
made such patent application or being granted such patents.
Any writings or other materials written or produced by the Executive
or under his supervision (whether alone or with others and whether or not
during regular business hours), during the Employment Period which are related,
directly or indirectly, to the business or affairs of the Company, its
subsidiaries or affiliates, or are capable of being used therein, and the
copyright thereof, common law or statutory, including all renewals and
extensions, shall be and remain the property of the Company. The Executive
agrees promptly to communicate and disclose all such writings or materials to
the Company and to execute and deliver to it any instruments deemed necessary
by the Company to effect the disclosure and assignment thereof to it. The
Executive further agrees, on request and at the expense of the Company, to take
any and all action deemed necessary by the Company to obtain copyrights or
other protections for such writings or other materials or to protect the
Company's right, title and interest therein. The Company shall indemnify and
hold the Executive harmless from any and all costs, expenses, liabilities or
damages sustained by the Executive by reason of the Executive's compliance with
the Company's request.
c. Return of Documents. Upon the termination of the Employment
Period, including any termination of employment described in Paragraph 8 and
any termination of employment described in Paragraph 1(b), the Executive will
promptly return to the Company all copies of information protected by Paragraph
9(a) hereof or pertaining to matters covered by subparagraph (b) of this
Paragraph 10 which are in his possession, custody or control, whether prepared
by him or others.
11. Separability.
The Executive agrees that the provisions of Paragraphs 9 and 10 hereof
constitute independent and separable covenants which shall survive the
termination of the Employment Period and which shall be enforceable by the
Company notwithstanding any rights or remedies the Executive may have under any
other provisions hereof. The Company agrees that the provisions of Paragraphs
4, 7 and 8 hereof constitute independent and separable covenants which shall
survive the termination of the Employment Period and which shall be enforceable
by the Executive notwithstanding any rights or remedies the Company may have
under any other provisions hereof.
12. Specific Performance.
The Executive acknowledges that (i) the services to be rendered under
the provisions of this Agreement and the obligations of the Executive assumed
herein are of a
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special, unique and extraordinary character; (ii) it would be difficult or
impossible to replace such services and obligations; (iii) the Company, its
subsidiaries and affiliates will be irreparably damaged if the provision hereof
are not specifically enforced; and (iv) the award of monetary damages will not
adequately protect the Company, its subsidiaries and affiliates in the event of
a breach hereof by the Executive. The Company acknowledges that (i) the
Executive will be irreparably damaged if the provisions of Paragraphs 1(b), 4,
7 and 8 hereof are not specifically enforced; and (ii) the award of monetary
damages will not adequately protect the Executive in the event of a breach
thereof by the Company. By virtue thereof, the Executive agrees and consents
that if he violates any of the provisions of this Agreement, and the Company
agrees and consents that if it violates any of the provisions of Paragraphs
1(b), 4, 7 and 8 hereof, the other party, in addition to any other rights and
remedies available under this Agreement or otherwise, shall (without any bond
or other security being required and without the necessity of proving monetary
damages) be entitled to a temporary and/or permanent injunction to be issued by
a court of competent jurisdiction restraining the breaching party from
committing or continuing any violation of this Agreement, or any other
appropriate decree of specific performance. Such remedies shall not be
exclusive and shall be in addition to any other remedy which any of them may
have.
12. Miscellaneous.
a) Entire Agreement; Amendment. This Agreement constitutes the
whole employment agreement between the parties and may not be modified, amended
or terminated except by a written instrument executed by the parties hereto.
All other agreements between the parties pertaining to the employment or
remuneration of the Executive not specifically contemplated hereby or
incorporated or merged herein are terminated and shall be of no further force
or effect.
b) Assignment. Except as stated below, this Agreement is not
assignable by the Company without the written consent of the Executive, or by
the Executive without the written consent of the Company, and any purported
assignment by either party of such party's rights and/or obligations under this
Agreement shall be null and void; provided, however, that, notwithstanding the
foregoing, the Company may merge or consolidate with or into another
corporation, or sell all or substantially all of its assets to another
corporation or business entity or otherwise reorganize itself, provided the
surviving corporation or entity, if not the Company, shall assume this
Agreement and become obligated to perform all of the terms and conditions
hereof, in which event the Executive's obligations shall continue in favor of
such other corporation or entity, subject however to the provisions of
Paragraph 3.
c) Waivers, etc. No waiver of any breach or default hereunder
shall be considered valid unless in writing, and no such waiver shall be deemed
a waiver of any subsequent breach or default of the same or similar nature.
The failure of any party to insist upon strict adherence to any term of this
Agreement on any occasion shall not operate or be construed as a waiver of the
right to insist upon strict adherence to that term of any other term of this
Agreement on that or any other occasion.
d) Provisions Overly Broad. In the event that any term or
provision of this Agreement shall be deemed by a court of competent
jurisdiction to be overly broad in scope,
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<PAGE>
duration or area of applicability, the court considering the same shall have
the power and hereby is authorized and directed to modify such term or
provision to limit such scope, duration or area, or all of them, so that such
term or provision is no longer overly broad and to enforce the same as so
limited. Subject to the foregoing sentence, in the event any provision of this
Agreement shall be held to be invalid or unenforceable for any reason, such
invalidity or unenforceability shall attach only to such provision and shall
not affect or render invalid or unenforceable any other provision of this
Agreement.
e) Notices. Any notice permitted or required hereunder shall be
in writing and shall be deemed to have been given on the date of delivery or,
if mailed by registered or certified mail, postage prepaid, on the date of
mailing:
i. if to the Executive to:
Stephen P. Kaufman
101 Lloyd Harbour Road
Huntington, New York 11743
ii. if to the Company to:
Arrow Electronics, Inc.
25 Hub Drive
Melville, New York 11747
Attention: Senior Vice President
and General Counsel
Either party may, by notice to the other, change his or its address for notice
hereunder.
f) New York Law. This Agreement shall be construed and governed
in all respects by the internal laws of the State of New York, without giving
effect to principles of conflicts of law.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
<TABLE>
<S> <C>
Attest: ARROW ELECTRONICS, INC.
/s/ WAYNE BRODY By: /s/ ROBERT E. KLATELL
---------------------------- ----------------------
Assistant Secretary Senior Vice President
THE EXECUTIVE
/s/ STEPHEN P. KAUFMAN
---------------------------
Stephen P. Kaufman
</TABLE>
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EXHIBIT 10(c)(v)
EMPLOYMENT AGREEMENT made as of the 1st day of September 1994 by and
between ARROW ELECTRONICS, INC., a New York corporation with its principal
office at 25 Hub Drive, Melville, New York 11747 (the "Company"), and STEVEN W.
MENEFEE, residing at 56 Snake Hill Road, Cold Spring Harbor, New York 11724
(the "Executive").
WHEREAS, the Executive is now and has been employed by the Company as
a Vice President, with the responsibilities and duties of a principal executive
officer of the Company; and
WHEREAS, the Company and the Executive wish to provide for the
continued employment of the Executive as an employee of the Company and for him
to continue to render services to the Company on the terms set forth in, and in
accordance with the provisions of, this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties agree as follows:
1. Employment and Duties.
a) Employment. The Company hereby employs the Executive for the
Employment Period defined in Paragraph 3, to perform such duties for the
Company, its subsidiaries and affiliates and to hold such offices as may be
specified from time to time by the Company's Board of Directors. The Executive
hereby accepts such employment.
b) Duties and Responsibilities. It is contemplated that the
Executive will be a Vice President of the Company and President of the
Arrow/Schweber Electronics Group, but the Board of Directors shall have the
right to adjust the duties, responsibilities, and title of the Executive as the
Board of Directors may from time to time deem to be in the interests of the
Company; provided, however, that during the Employment Period, without the
consent of the Executive, he shall not be assigned any titles, duties or
responsibilities which, in the aggregate, represent a material diminution in,
or are materially inconsistent with, his prior title, duties, and
responsibilities.
c) Time Devoted to Duties. The Executive shall devote all of his
normal business time and efforts to the business of the Company, its
subsidiaries and its affiliates, the amount of such time to be sufficient, in
the reasonable judgment of the Board of Directors, to permit him diligently and
faithfully to serve and endeavor to further their interests to the best of his
ability.
<PAGE>
d) Location of Office. The Company shall not require the
Executive to locate his office more than fifty miles from his current residence
address, without his prior written consent.
2. Compensation.
a) Monetary Remuneration and Benefits. During the Employment
Period, the Company shall pay to the Executive for all services rendered by him
in any capacity:
i. a minimum base salary of $320,000 per year (payable
in accordance with the Company's then prevailing practices, but in no
event less frequently than in equal monthly installments), subject to
increase if the Board of Directors of the Company in its sole
discretion so determines;
ii. such additional compensation by way of salary or
bonus or fringe benefits as the Board of Directors of the Company in
its sole discretion shall authorize or agree to pay, payable on such
terms and conditions as it shall determine; and
iii. such employee benefits that are made available by the
Company to its other principal executives.
b) Automobile. During the Employment Period, the Company will
pay the Executive a monthly automobile allowance of $800.
c) Expenses. During the Employment Period, the Company agrees to
reimburse the Executive, upon the submission of appropriate vouchers, for
out-of-pocket expenses (including, without limitation, expenses for travel,
lodging and entertainment) incurred by the Executive in the course of his
duties hereunder.
d) Office and Staff. The Company will provide the Executive with
an office, secretary and such other facilities as may be reasonably required
for the proper discharge of his duties hereunder.
e) Indemnification. The Company agrees to indemnify the
Executive for any and all liabilities to which he may be subject as a result of
his employment hereunder (and as a result of his service as an officer or
director of the Company, or as an officer or director of any of its
subsidiaries or affiliates), as well as the costs of any legal action brought
or threatened against him as a result of such employment, to the fullest extent
permitted by law.
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<PAGE>
f) Participation in Plans. Notwithstanding any other provision
of this Agreement, the Executive shall have the right to participate in any and
all of the plans or programs made available by the Company (or it subsidiaries,
divisions or affiliates) to, or for the benefit of, executives or employees in
general.
3. The Employment Period.
The "Employment Period," as used in the Agreement, shall mean the
period beginning as of the date hereof and terminating on the last day of the
calendar month in which the first of the following occurs:
a) the death of the Executive;
b) the disability of the Executive as determined in accordance
with Paragraph 4 hereof and subject to the provisions thereof;
c) the termination of the Executive's employment by the Company
for cause in accordance with Paragraph 5 hereof; or
d) December 31, 1997; provided, however, that, unless sooner
terminated as otherwise provided herein, the Employment Period shall
automatically be extended for one or more twelve (12) month periods beyond the
then scheduled expiration date thereof unless between the 18th and 12th month
preceding such scheduled expiration date either the Company or the Executive
gives the other written notice of its or his election not to have the
Employment Period so extended.
4. Disability.
For purposes of this Agreement, the Executive will be deemed
"disabled" upon the earlier to occur of (i) his becoming disabled as defined
under the terms of the disability benefit program applicable to the Executive,
if any, and (ii) his absence from his duties hereunder on a full-time basis for
one hundred eighty (180) consecutive days as a result of his incapacity due to
accident or physical or mental illness. If the Executive becomes disabled (as
defined in the preceding sentence), the Employment Period shall terminate on
the last day of the month in which such disability is determined. Until such
termination of the Employment Period, the Company shall continue to pay to the
Executive his base salary, any additional compensation authorized by the
Company's Board of Directors, and other remuneration and benefits provided in
accordance with Paragraph 2 hereof, all without delay, diminution or proration
of any kind whatsoever (except that his remuneration hereunder shall be reduced
by the amount of any payments he may otherwise
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<PAGE>
receive as a result of his disability pursuant to a disability program provided
by or through the Company).
In the event that, notwithstanding such a determination of disability,
the Executive is determined not to be totally and permanently disabled prior to
the then scheduled expiration of the Employment Period, the Executive shall be
entitled to resume employment with the Company under the terms of this
Agreement for the then remaining balance of the Employment Period.
5. Termination for Cause.
In the event of any malfeasance, willful misconduct, active fraud or
gross negligence by the Executive in connection with his employment hereunder,
the Company shall have the right to terminate the Employment Period by giving
the Executive notice in writing of the reason for such proposed termination.
If the Executive shall not have corrected such conduct to the satisfaction of
the Company within thirty days after such notice, the Employment Period shall
terminate and the Company shall have no further obligation to the Executive
hereunder but the restriction on the Executive's activities contained in
Paragraph 7 and the obligations of the Executive contained in Paragraphs 8(b)
and 8(c) shall continue in effect as provided therein.
6. Termination Without Cause.
In the event that the Company discharges the Executive during the
Employment Period without cause, the Executive shall be entitled to the salary
provided in Paragraph 2, the full vesting of any restricted stock awards and
the immediate exercisability of any stock options, for the full Employment
Period (which, in that event, shall continue until the then scheduled
expiration of the Employment Period unless sooner terminated by the Executive's
disability or death), and the Company shall have no right to set off payments
due the Executive with any amounts he may earn from gainful employment
elsewhere. It is expressly agreed and understood that the Executive shall be
under no obligation to seek such employment. The provisions of Paragraph 7
restricting the Executive's activities and the Executive's obligations under
Paragraphs 8(b) and 8(c) shall continue in effect. The provisions of this
Paragraph 6 shall not act to limit the Executive's ability to recover damages
from the Company for breaching this Agreement by terminating the Employment
Period without cause, except as otherwise permitted by Paragraph 3.
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<PAGE>
7. Non-Competition: Trade Secrets.
During the Employment Period and for a period of one year after the
termination of the Employment Period, the Executive will not, directly or
indirectly:
a) Disclosure of Information. Use, attempt to use, disclose or
otherwise make known to any person or entity (other than to the Board of
Directors of the Company or otherwise in the course of the business of the
Company, its subsidiaries or affiliates and except as may be required by
applicable law):
i. any knowledge or information, including, without
limitation, lists of customers or suppliers, trade secrets, know-how,
inventions, discoveries, processes and formulae, as well as all data
and records pertaining thereto, which he may acquire in the course of
his employment, in any manner which may be detrimental to or cause
injury or loss to the Company, its subsidiaries or affiliates; or
ii. any knowledge or information of a confidential nature
(including all unpublished matters) relating to, without limitation,
the business, properties, accounting, books and records, trade secrets
or memoranda of the company, its subsidiaries or affiliates, which he
now knows or may come to know in any manner which may be detrimental
to or cause injury or loss to the Company, its subsidiaries or
affiliates;
b) Non-Competition. Engage or become interested in the United
States, Canada or Mexico (whether as an owner, shareholder, partner, lender or
other investor, director, officer, employee, consultant or otherwise) in the
business of distributing electronic parts, components, supplies or systems, or
any other business that is competitive with the principal business or
businesses then conducted by the Company, its subsidiaries or affiliates
(provided, however, that nothing contained herein shall prevent the Executive
from acquiring or owning less than 1% of the issued and outstanding capital
stock or debentures of a corporation whose securities are listed on the New
York Stock Exchange, American Stock Exchange, or the National Association of
Securities Dealers Automated Quotation System, if such investment is otherwise
permitted by the Company's Human Resource and Conflict of Interest policies);
c) Solicitation. Solicit or participate in the solicitation of
any business of any type conducted by the Company, its subsidiaries or
affiliates, during said term or thereafter, from any person, firm or other
entity which was or
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<PAGE>
at the time is a supplier or customer, or prospective supplier or customer, of
the Company, its subsidiaries or affiliates; or
d) Employment. Employ or retain, or arrange to have any other
person, firm or other entity employ or retain, or otherwise participate in the
employment or retention of, any person who was an employee or consultant of the
Company, its subsidiaries or affiliates, at any time during the period of
twelve consecutive months immediately preceding such employment or retention.
The Executive will promptly furnish in writing to the Company, its
subsidiaries or affiliates, any information reasonably requested by the Company
(including any third party confirmations) with respect to any activity or
interest the Executive may have in any business.
Except as expressly herein provided, nothing contained herein is
intended to prevent the Executive, at any time after the termination of the
Employment Period, from either (i) being gainfully employed or (ii) exercising
his skills and abilities outside of such geographic areas, provided in either
case the provisions of this Agreement are complied with.
8. Preservation of Business.
a) General. During the Employment Period, the Executive will use
his best efforts to advance the business and organization of the Company, its
subsidiaries and affiliates, to keep available to the Company, its subsidiaries
and affiliates, the services of present and future employees and to advance the
business relations with its suppliers, customers and others.
b) Patents and Copyrights, etc. The Executive agrees, without
additional compensation, to make available to the Company all knowledge
possessed by him relating to any methods, developments, inventions, processes,
discoveries and/or improvements (whether patented, patentable or unpatentable)
which concern in any way the business of the Company, its subsidiaries or
affiliates, whether acquired by the Executive before or during his employment
hereunder.
Any methods, developments, inventions, processes, discoveries and/or
improvements (whether patented, patentable or unpatentable) which the Executive
may conceive of or make, related directly or indirectly to the business or
affairs of the Company, its subsidiaries or affiliates, or any part thereof,
during the Employment Period, shall be and remain the property of the Company.
The Executive agrees promptly to communicate and disclose all such methods,
developments, inventions, processes, discoveries and/or improvements to the
Company and to
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<PAGE>
execute and deliver to it any instruments deemed necessary by the Company to
effect the disclosure and assignment thereof to it. The Executive also agrees,
on request and at the expense of the Company, to execute patent applications
and any other instruments deemed necessary by the Company for the prosecution
of such patent applications or the acquisition of Letters Patent in the United
States or any other country and for the assignment to the Company of any
patents which may be issued. The Company shall indemnify and hold the
Executive harmless from any and all costs, expenses, liabilities or damages
sustained by the Executive by reason of having made such patent applications or
being granted such patents.
Any writings or other materials written or produced by the Executive
or under his supervision (whether alone or with others and whether or not
during regular business hours), during the Employment Period which are related,
directly or indirectly, to the business or affairs of the Company, its
subsidiaries or affiliates, or are capable of being used therein, and the
copyright thereof, common law or statutory, including all renewals and
extensions, shall be and remain the property of the Company. The Executive
agrees promptly to communicate and disclose all such writings or materials to
the Company and to execute and deliver to it any instruments deemed necessary
by the Company to effect the disclosure and assignment thereof to it. The
Executive further agrees, on request and at the expense of the Company, to take
any and all action deemed necessary by the Company to obtain copyrights or
other protections for such writings or other materials or to protect the
Company's right, title and interest therein. The Company shall indemnify and
hold the Executive harmless from any and all costs, expenses, liabilities or
damages sustained by the Executive by reason of the Executive's compliance with
the Company's request.
C. Return of Documents. Upon the termination of the Employment
Period, including any termination of employment described in Paragraph 6, the
Executive will promptly return to the Company all copies of information
protected by Paragraph 7(a) hereof or pertaining to matters covered by
subparagraph (b) of this Paragraph 8 which are in his possession, custody or
control, whether prepared by him or others.
9. Separability.
The Executive agrees that the provisions of Paragraphs 7 and 8 hereof
constitute independent and separable covenants which shall survive the
termination of the Employment Period and which shall be enforceable by the
Company notwithstanding any rights or remedies the Executive may have under any
other provisions hereof. The Company agrees that the provisions of Paragraph 6
hereof constitute independent and separable covenants which shall survive the
termination of the Employment
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<PAGE>
Period and which shall be enforceable by the Executive notwithstanding any
rights or remedies the Company may have under any other provisions hereof
10. Specific Performance.
The Executive acknowledges that (i) the services to be rendered under
the provisions of this Agreement and the obligations of the Executive assumed
herein are of a special, unique and extraordinary character; (ii) it would be
difficult or impossible to replace such services and obligations; (iii) the
Company, its subsidiaries and affiliates will be irreparably damaged if the
provisions hereof are not specifically enforced; and (iv) the award of monetary
damages will not adequately protect the company, its subsidiaries and
affiliates in the event of a breach hereof by the Executive. The Company
acknowledges that (i) the Executive will be irreparably damaged if the
provisions of Paragraphs 1(b) and 6 hereof are not specifically enforced and
(ii) the award of monetary damages will not adequately protect the Executive in
the event of a breach thereof by the Company. By virtue thereof, the Executive
agrees and consents that if he violates any of the provisions of this
Agreement, and the Company agrees and consents that if it violates any of the
provisions of Paragraphs 1(b) and 6 hereof, the other party, in addition to any
other rights and remedies available under this Agreement or otherwise, shall
(without any bond or other security being required and without the necessity of
proving monetary damages) be entitled to a temporary and/or permanent
injunction to be issued by a court of competent jurisdiction restraining the
breaching party from committing or continuing any violation of this Agreement,
or any other appropriate decree of specific performance. Such remedies shall
not be exclusive and shall be in addition to any other remedy which any of them
may have.
11. Miscellaneous.
a) Entire Agreement; Amendment. This Agreement constitutes the
whole employment agreement between the parties and may not be modified, amended
or terminated except by a written instrument executed by the parties hereto.
It is specifically agreed and understood, however, that the provisions of (i)
that certain letter agreement dated as of November 1, 1990 granting to the
Executive extended separation benefits in the event of a change in control of
the Company and (ii) the Executive's current incentive compensation agreement
(i.e., for 1994), shall survive and shall not be affected hereby. All other
agreements between the parties pertaining to the employment or remuneration of
the Executive not specifically contemplated hereby or incorporated or merged
herein are
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<PAGE>
terminated and shall be of no further force or effect.
b) Assignment. Except as stated below, this Agreement is not
assignable by the Company without the written consent of the Executive, or by
the Executive without the written consent of the Company, and any purported
assignment by either party of such party's rights and/or obligations under this
Agreement shall be null and void; provided, however, that, notwithstanding the
foregoing, the Company may merge or consolidate with or into another
corporation, or sell all or substantially all of its assets to another
corporation or business entity or otherwise reorganize itself, provided the
surviving corporation or entity, if not the Company, shall assume this
Agreement and become obligated to perform all of the terms and conditions
hereof, in which event the Executive's obligations shall continue in favor of
such other corporation or entity.
c) Waivers, etc. No waiver of any breach or default hereunder
shall be considered valid unless in writing, and no such waiver shall be deemed
a waiver of any subsequent breach or default of the same or similar nature.
The failure of any party to insist upon strict adherence to any term of this
Agreement on any occasion shall not operate or be construed as a waiver of the
right to insist upon strict adherence to that term or any other term of this
Agreement on that or any other occasion.
d) Provisions Overly Broad. In the event that any term or
provision of this Agreement shall be deemed by a court of competent
jurisdiction to be overly broad in scope, duration or area of applicability,
the court considering the same shall have the power and hereby is authorized
and directed to modify such term or provision to limit such scope, duration or
area, or all of them, so that such term or provision is no longer overly broad
and to enforce the same as so limited. Subject to the foregoing sentence, in the
event any provision of this Agreement shall be held to be invalid or
unenforceable for any reason, such invalidity or unenforceability shall attach
only to such provision and shall not affect or render invalid or unenforceable
any other provision of this Agreement.
e) Notices. Any notice permitted or required hereunder shall be
in writing and shall be deemed to have been given on the date of delivery or,
if mailed by registered or certified mail, postage prepaid, on the date of
mailing:
i. if to the Executive to:
Steven W. Menefee
56 Snake Hill Road
Cold Spring Harbor, New York 11724
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<PAGE>
ii. if to the Company to:
Arrow Electronics, Inc.
25 Hub Drive
Melville, New York 11747
Attention: Senior Vice President
and General Counsel
Either party may, by notice to the other, change his or its address for notice
hereunder.
f) New York Law. This Agreement shall be construed and governed
in all respects by the internal laws of the State of New York, without giving
effect to principles of conflicts of law.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
<TABLE>
<S> <C>
Attest: ARROW ELECTRONICS, INC.
/s/ ROBERT E. KLATELL By: /s/ STEPHEN P. KAUFMAN
------------------ ---------------------
Secretary
THE EXECUTIVE
/s/ STEVEN W. MENEFEE
------------------------
Steven W. Menefee
</TABLE>
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EXHIBIT 10(c)(viii)
EMPLOYMENT AGREEMENT made as of the 29th day of August 1994 by and
between ARROW ELECTRONICS, INC., a New York corporation with its principal
office at 25 Hub Drive, Melville, New York 11747 (the "Company"), and Philip
Ellett, residing at 411 Barrington Park Drive, Greer, South Carolina 29650 (the
"Executive").
WHEREAS, the Company wishes to employ the Executive as a Vice
President, with the responsibilities and duties of a principal executive
officer of the Company; and
WHEREAS, the Company and the Executive wish to provide for the
employment of the Executive as an employee of the Company and for him to render
services to the Company on the terms set forth in, and in accordance with the
provisions of, this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties agree as follows:
1. Employment and Duties.
a) Employment. The Company hereby employs the Executive for the
Employment Period defined in Paragraph 3, to perform such duties for the
Company, its subsidiaries and affiliates and to hold such offices as may be
specified from time to time by the Company's Board of Directors. The Executive
hereby accepts such employment.
b) Duties and Responsibilities. It is contemplated that the
Executive will be a Vice President of the Company and President of the
Gates/Arrow Group, but the Board of Directors shall have the right to adjust
the duties, responsibilities, and title of the Executive as the Board of
Directors may from time to time deem to be in the interests of the Company;
provided, however, that during the Employment Period, without the consent of
the Executive, he shall not be assigned any titles, duties or responsibilities
which, in the aggregate, represent a material diminution in, or are materially
inconsistent with, his prior title, duties, and responsibilities.
c) Time Devoted to Duties. The Executive shall devote all of his
normal business time and efforts to the business of the Company, its
subsidiaries and its affiliates, the amount of such time to be sufficient, in
the reasonable judgment of the Board of Directors, to permit him diligently and
faithfully to serve and endeavor to further their interests to the best of his
ability.
<PAGE>
d) Location of Office. The Company shall not require the
Executive to locate his office more than fifty miles from his current residence
address, without his prior written consent.
2. Compensation
a) Monetary Remuneration and Benefits. During the Employment
Period, the Company shall pay to the Executive for all services rendered by him
in any capacity:
i. a minimum base salary of $265,000 per year (payable
in accordance with the Company's then prevailing practices, but in no
event less frequently than in equal monthly installments), subject to
increase if the Board of Directors of the Company in its sole
discretion so determines;
ii. such additional compensation by way of salary or
bonus or fringe benefits as the Board of Directors of the Company in
its sole discretion shall authorize or agree to pay, payable on such
terms and conditions as it shall determine; and
iii. such employee benefits that are made available by the
Company to its other principal executives.
b) Automobile. During the Employment Period, the Company will
pay the Executive a monthly automobile allowance of $800.
c) Expenses. During the Employment Period, the Company agrees to
reimburse the Executive, upon the submission of appropriate vouchers, for
out-of-pocket expenses (including, without limitation, expenses for travel,
lodging and entertainment) incurred by the Executive in the course of his
duties hereunder.
d) Office and Staff. The Company will provide the Executive with
an office, secretary and such other facilities as may be reasonably required
for the proper discharge of his duties hereunder.
e) Indemnification. The Company agrees to indemnify the
Executive for any and all liabilities to which he may be subject as a result of
his employment hereunder (and as a result of his service as an officer or
director of the Company, or as
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an officer or director of any of its subsidiaries or affiliates), as well as
the costs of any legal action brought or threatened against him as a result of
such employment, to the fullest extent permitted by law.
f) Participation in Plans. Notwithstanding any other provision
of this Agreement, the Executive shall have the right to participate in any and
all of the plans or programs made available by the Company (or it subsidiaries,
divisions or affiliates) to, or for the benefit of, executives or employees of
the Gates/Arrow Group in general.
3. The Employment Period.
The "Employment Period," as used in the Agreement, shall mean the
period beginning as of the date hereof and terminating on the last day of the
calendar month in which the first of the following occurs:
a) the death of the Executive;
b) the disability of the Executive as determined in accordance
with Paragraph 4 hereof and subject to the provisions thereof;
c) the termination of the Executive's employment by the Company
for cause in accordance with Paragraph 5 hereof; or
d) December 31, 1996; provided, however, that, unless sooner
terminated as otherwise provided herein, the Employment Period shall
automatically be extended for one or more twelve (12) month periods beyond the
then scheduled expiration date thereof unless between the 12th and 6th month
preceding such scheduled expiration date either the Company or the Executive
gives the other written notice of its or his election not to have the
Employment Period so extended.
4. Disability.
For purposes of this Agreement, the Executive will be deemed
"disabled" upon the earlier to occur of (i) his becoming disabled as defined
under the terms of the disability benefit program applicable to the Executive,
if any, and (ii) his absence from his duties hereunder on a full-time basis for
one hundred eighty (180) consecutive days as a result of his incapacity due to
accident or physical or mental illness. If the Executive becomes disabled (as
defined in the preceding sentence), the Employment Period shall terminate on
the last day
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<PAGE>
of the month in which such disability is determined. Until such termination of
the Employment Period, the Company shall continue to pay to the Executive his
base salary, any additional compensation authorized by the Company's Board of
Directors, and other remuneration and benefits provided in accordance with
Paragraph 2 hereof, all without delay, diminution or proration of any kind
whatsoever (except that his remuneration hereunder shall be reduced by the
amount of any payments he may otherwise receive as a result of his disability
pursuant to a disability program provided by or through the Company).
In the event that, notwithstanding such a determination of disability,
the Executive is determined not to be totally and permanently disabled prior to
the then scheduled expiration of the Employment Period, the Executive shall be
entitled to resume employment with the Company under the terms of this
Agreement for the then remaining balance of the Employment Period.
5. Termination for Cause.
In the event of any malfeasance, willful misconduct, active fraud or
gross negligence by the Executive in connection with his employment hereunder,
the Company shall have the right to terminate the Employment Period by giving
the Executive notice in writing of the reason for such proposed termination.
If the Executive shall not have corrected such conduct to the satisfaction of
the Company within thirty days after such notice, the Employment Period shall
terminate and the Company shall have no further obligation to the Executive
hereunder but the restriction on the Executive's activities contained in
Paragraph 7 and the obligations of the Executive contained in Paragraphs 8(b)
and 8(c) shall continue in effect as provided therein.
6. Termination Without Cause.
In the event that the Company discharges the Executive during the
Employment Period without cause, the Executive shall be entitled to the salary
provided in Paragraph 2, the full vesting of any restricted stock awards and
the immediate exercisability of any stock options, for the full Employment
Period (which, in that event, shall continue until the then scheduled
expiration of the Employment Period unless sooner terminated by the Executive's
disability or death), and the Company shall have no right to set off payments
due the Executive with any amounts he may earn from gainful employment
elsewhere. It is expressly agreed and understood that the
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Executive shall be under no obligation to seek such employment. The provisions
of Paragraph 7 restricting the Executive's activities and the Executive's
obligations under Paragraphs 8(b) and 8(c) shall continue in effect. The
provisions of this Paragraph 6 shall not act to limit the Executive's ability
to recover damages from the Company for breaching this Agreement by terminating
the Employment Period without cause, except as otherwise permitted by Paragraph
3.
7. Non-Competition: Trade Secrets.
During the Employment Period and for a period of one year after the
termination of the Employment Period, the Executive will not, directly or
indirectly:
a) Disclosure of Information. Use, attempt to use, disclose or
otherwise make known to any person or entity (other than to the Board of
Directors of the Company or otherwise in the course of the business of the
Company, its subsidiaries or affiliates and except as may be required by
applicable law):
i. any knowledge or information, including, without
limitation, lists of customers or suppliers, trade secrets, know-how,
inventions, discoveries, processes and formulae, as well as all data
and records pertaining thereto, which he may acquire in the course of
his employment, in any manner which may be detrimental to or cause
injury or loss to the Company, its subsidiaries or affiliates; or
ii. any knowledge or information of a confidential nature
(including all unpublished matters) relating to, without limitation,
the business, properties, accounting, books and records, trade secrets
or memoranda of the Company, its subsidiaries or affiliates, which he
now knows or may come to know in any manner which may be detrimental
to or cause injury or loss to the Company, its subsidiaries or
affiliates;
b) Non-competition. Engage or become interested in the United
States, Canada or Mexico (whether as an owner, shareholder, partner, lender or
other investor, director, officer, employee, consultant or otherwise) in the
business of distributing electronic parts, components, supplies or systems, or
any other business that is competitive with the principal business or
businesses then conducted by the Company, its
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<PAGE>
subsidiaries or affiliates (provided, however, that nothing contained herein
shall prevent the Executive from acquiring or owning less than 1% of the issued
and outstanding capital stock or debentures of a corporation whose securities
are listed on the New York Stock Exchange, American Stock Exchange, or the
National Association of Securities Dealers Automated Quotation System, if such
investment is otherwise permitted by the Company's Human Resource and Conflict
of Interest policies);
c) Solicitation. Solicit or participate in the solicitation of
any business of any type conducted by the Company, its subsidiaries or
affiliates, during said term or thereafter, from any person, firm or other
entity which was or at the time is a supplier or customer, or prospective
supplier or customer, of the Company, its subsidiaries or affiliates; or
d) Employment. Employ or retain, or arrange to have any other
person, firm or other entity employ or retain, or otherwise participate in the
employment or retention of, any person who was an employee or consultant of the
Company, its subsidiaries or affiliates, at any time during the period of
twelve consecutive months immediately preceding such employment or retention.
The Executive will promptly furnish in writing to the Company, its
subsidiaries or affiliates, any information reasonably requested by the Company
(including any third party confirmations) with respect to any activity or
interest the Executive may have in any business.
Except as expressly herein provided, nothing contained herein is
intended to prevent the Executive, at any time after the termination of the
Employment Period, from either (i) being gainfully employed or (ii) exercising
his skills and abilities outside of such geographic areas, provided in either
case the provisions of this Agreement are complied with.
8. Preservation of Business.
a) General. During the Employment Period, the Executive will use
his best efforts to advance the business and organization of the Company, its
subsidiaries and affiliates, to keep available to the Company, its subsidiaries
and affiliates, the services of present and future employees and to advance the
business relations with its suppliers, customers and others.
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<PAGE>
b) Patents and Copyrights, etc. The Executive agrees, without
additional compensation, to make available to the Company all knowledge
possessed by him relating to any methods, developments, inventions, processes,
discoveries and/or improvements (whether patented, patentable or unpatentable)
which concern in any way the business of the Company, its subsidiaries or
affiliates, whether acquired by the Executive before or during his employment
hereunder.
Any methods, developments, inventions, processes, discoveries and/or
improvements (whether patented, patentable or unpatentable) which the Executive
may conceive of or make, related directly or indirectly to the business or
affairs of the Company, its subsidiaries or affiliates, or any part thereof,
during the Employment Period, shall be and remain the property of the Company.
The Executive agrees promptly to communicate and disclose all such methods,
developments, inventions, processes, discoveries and/or improvements to the
Company and to execute and deliver to it any instruments deemed necessary by
the Company to effect the disclosure and assignment thereof to it. The
Executive also agrees, on request and at the expense of the Company, to execute
patent applications and any other instruments deemed necessary by the Company
for the prosecution of such patent applications or the acquisition of Letters
Patent in the United States or any other country and for the assignment to the
Company of any patents which may be issued. The Company shall indemnify and
hold the Executive harmless from any and all costs, expenses, liabilities or
damages sustained by the Executive by reason of having made such patent
applications or being granted such patents.
Any writings or other materials written or produced by the Executive
or under his supervision (whether alone or with others and whether or not
during regular business hours), during the Employment Period which are related,
directly or indirectly, to the business or affairs of the Company, its
subsidiaries or affiliates, or are capable of being used therein, and the
copyright thereof, common law or statutory, including all renewals and
extensions, shall be and remain the property of the Company. The Executive
agrees promptly to communicate and disclose all such writings or materials to
the Company and to execute and deliver to it any instruments deemed necessary
by the Company to effect the disclosure and assignment thereof to it. The
Executive further agrees, on request and at the expense of the Company, to take
any and all action deemed necessary by the Company to obtain copyrights or
other protections for such writings or other materials or to protect the
Company's right, title and interest therein. The Company shall indemnify and
hold the Executive harmless from any and all costs, expenses,
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<PAGE>
liabilities or damages sustained by the Executive by reason of the Executive's
compliance with the Company's request.
c. Return of Documents. Upon the termination of the Employment
Period, including any termination of employment described in Paragraph 6, the
Executive will promptly return to the Company all copies of information
protected by Paragraph 7(a) hereof or pertaining to matters covered by
subparagraph (b) of this Paragraph 8 which are in his possession, custody or
control, whether prepared by him or others.
9. Separability.
The Executive agrees that the provisions of Paragraphs 7 and 8 hereof
constitute independent and separable covenants which shall survive the
termination of the Employment Period and which shall be enforceable by the
Company notwithstanding any rights or remedies the Executive may have under any
other provisions hereof. The Company agrees that the provisions of Paragraph 6
hereof constitute independent and separable covenants which shall survive the
termination of the Employment Period and which shall be enforceable by the
Executive notwithstanding any rights or remedies the Company may have under any
other provisions hereof.
10. Specific Performance.
The Executive acknowledges that (i) the services to be rendered under
the provisions of this Agreement and the obligations of the Executive assumed
herein are of a special, unique and extraordinary character; (ii) it would be
difficult or impossible to replace such services and obligations; (iii) the
Company, its subsidiaries and affiliates will be irreparably damaged if the
provisions hereof are not specifically enforced; and (iv) the award of monetary
damages will not adequately protect the Company, its subsidiaries and
affiliates in the event of a breach hereof by the Executive. The Company
acknowledges that (i) the Executive will be irreparably damaged if the
provisions of Paragraphs 1(b) and 6 hereof are not specifically enforced and
(ii) the award of monetary damages will not adequately protect the Executive in
the event of a breach thereof by the Company. By virtue thereof, the Executive
agrees and consents that if he violates any of the provisions of this
Agreement, and the Company agrees and consents that if it violates any of the
provisions of Paragraphs 1(b) and 6 hereof, the other party, in addition to any
other rights and remedies available under this Agreement or otherwise, shall
(without any bond or other security being required and without the necessity
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of proving monetary damages) be entitled to a temporary and/or permanent
injunction to be issued by a court of competent jurisdiction restraining the
breaching party from committing or continuing any violation of this Agreement,
or any other appropriate decree of specific performance. Such remedies shall
not be exclusive and shall be in addition to any other remedy which any of them
may have.
11. Miscellaneous.
a) Entire Agreement; Amendment. This Agreement constitutes the
whole employment agreement between the parties and may not be modified, amended
or terminated except by a written instrument executed by the parties hereto.
It is specifically agreed and understood, however, that the provisions of that
certain letter agreement dated as of the date hereof granting to the Executive
extended separation benefits in the event of a change in control of the
Company, shall survive and shall not be affected hereby. All other agreements
between the parties pertaining to the employment or remuneration of the
Executive not specifically contemplated hereby or incorporated or merged herein
are terminated and shall be of no further force or effect.
b) Assignment. Except as stated below, this Agreement is not
assignable by the Company without the written consent of the Executive, or by
the Executive without the written consent of the Company, and any purported
assignment by either party of such party's rights and/or obligations under this
Agreement shall be null and void; provided, however, that, notwithstanding the
foregoing, the Company may merge or consolidate with or into another
corporation, or sell all or substantially all of its assets to another
corporation or business entity or otherwise reorganize itself, provided the
surviving corporation or entity, if not the Company, shall assume this
Agreement and become obligated to perform all of the terms and conditions
hereof, in which event the Executive's obligations shall continue in favor of
such other corporation or entity.
c) Waivers, etc. No waiver of any breach or default hereunder
shall be considered valid unless in writing, and no such waiver shall be deemed
a waiver of any subsequent breach or default of the same or similar nature.
The failure of any party to insist upon strict adherence to any term of this
Agreement on any occasion shall not operate or be construed as a waiver of the
right to insist upon strict adherence to that term or any other term of this
Agreement on that or any other occasion.
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d) Provisions Overly Broad. In the event that any term or
provision of this Agreement shall be deemed by a court of competent
jurisdiction to be overly broad in scope, duration or area of applicability,
the court considering the same shall have the power and hereby is authorized
and directed to modify such term or provision to limit such scope, duration or
area, or all of them so that such term or provision is no longer overly broad
and to enforce the same as so limited. Subject to the foregoing sentence, in
the event any provision of this Agreement shall be held to be invalid or
unenforceable for any reason, such invalidity or unenforceability shall attach
only to such provision and shall not affect or render invalid or unenforceable
any other provision of this Agreement.
e) Notices. Any notice permitted or required hereunder shall be
in writing and shall be deemed to have been given on the date of delivery or,
if mailed by registered or certified mail, postage prepaid, on the date of
mailing:
i. if to the Executive to:
Philip Ellett
411 Barrington Park Drive
Greer, South Carolina 29650
ii. if to the Company to:
Arrow Electronics, Inc.
25 Hub Drive
Melville, New York 11747
Attention: Senior Vice President
and General Counsel
Either party may, by notice to the other, change his or its address for notice
hereunder.
f) New York Law. This Agreement shall be construed and governed
in all respects by the internal laws of the State of New York, without giving
effect to principles of conflicts of law.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
<TABLE>
<S> <C>
Attest: ARROW ELECTRONICS, INC.
/s/ WAYNE BRODY By: /s/ ROBERT E. KLATELL
------------------- -------------------
Secretary
THE EXECUTIVE
/s/ PHILIP ELLETT
-------------------
Philip Ellett
</TABLE>
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EXHIBIT 10(c)(ix)
EMPLOYMENT AGREEMENT made as of the 21st day of September, 1994 by and
between ARROW ELECTRONICS, INC., a New York corporation with its principal
office at 25 Hub Drive, Melville, New York 11747 (the "Company"), and JOHN J.
POWERS, III, residing at 12200 Old Snakey Road, Los Altos Hills, CA 94022 (the
"Executive").
WHEREAS, the Company wishes to employ the Executive as a Vice
President, with the responsibilities and duties of a principal executive
officer of the Company; and
WHEREAS, the Company and the Executive wish to provide for the
employment of the Executive as an employee of the Company and for him to render
services to the Company on the terms set forth in, and in accordance with the
provisions of, this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties agree as follows:
1. Employment and Duties.
a) Employment. The Company hereby employs the Executive for the
Employment Period defined in Paragraph 3, to perform such duties for the
Company, its subsidiaries and affiliates and to hold such offices as may be
specified from time to time by the Company's Board of Directors. The Executive
hereby accepts such employment.
b) Duties and Responsibilities. It is contemplated that the
Executive will be a Vice President of the Company and President of Anthem
Electronics, Inc., but the Board of Directors shall have the right to adjust
the duties, responsibilities, and title of the Executive as the Board of
Directors may from time to time deem to be in the interests of the Company;
provided, however, that during the Employment Period, without the consent of
the Executive, he shall not be assigned any titles, duties or responsibilities
which, in the aggregate, represent a material diminution in, or are materially
inconsistent with, his prior title, duties, and responsibilities.
c) Time Devoted to Duties. The Executive shall devote all of
his normal business time and efforts to the business of the Company, its
subsidiaries and its affiliates, the amount of such time to be sufficient, in
the reasonable judgment of the Board of Directors, to permit him diligently
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and faithfully to serve and endeavor to further their interests to the best of
his ability.
d) Location of Office. The Company shall not require the
Executive to locate his office more than fifty miles from his current residence
address, without his prior written consent.
2. Compensation.
a) Monetary Remuneration and Benefits. During the Employment
Period, the Company shall pay to the Executive for all services rendered by him
in any capacity:
i. a minimum base salary of $300,000 per year (payable
in accordance with the Company's then prevailing practices, but in no
event less frequently than in equal monthly installments), subject to
increase if the Board of Directors of the Company in its sole
discretion so determines;
ii. such additional compensation by way of salary or
bonus or fringe benefits as the Board of Directors of the Company in
its sole discretion shall authorize or agree to pay, payable on such
terms and conditions as it shall determine; and
iii. such employee benefits that are made available by
the Company to its other principal executives.
b) Automobile. During the Employment Period, the Company will
pay the Executive a monthly automobile allowance of $700.
c) Expenses. During the Employment Period, the Company agrees
to reimburse the Executive, upon the submission of appropriate vouchers, for
out-of-pocket expenses (including, without limitation, expenses for travel,
lodging and entertainment) incurred by the Executive in the course of his
duties hereunder.
d) Office and Staff. The Company will provide the Executive
with an office, secretary and such other facilities as may be reasonably
required for the proper discharge of his duties hereunder.
e) Indemnification. The Company agrees to indemnify the
Executive for any and all liabilities to which he may be subject as a result of
his employment hereunder (and as a result of his service as an officer or
director of the Company, or as an officer or director of any of its
subsidiaries or
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affiliates), as well as the costs of any legal action brought or threatened
against him as a result of such employment, to the fullest extent permitted by
law.
f) Participation in Plans. Notwithstanding any other provision
of this Agreement, the Executive shall have the right to participate in any and
all of the plans or programs made available by the Company (or it subsidiaries,
divisions or affiliates) to, or for the benefit of, executives or employees of
the [Name of Business Unit] in general.
3. The Employment Period.
The "Employment Period," as used in the Agreement, shall mean the
period beginning as of the date hereof and terminating on the last day of the
calendar month in which the first of the following occurs:
a) the death of the Executive;
b) the disability of the Executive as determined in
accordance with Paragraph 4 hereof and subject to the provisions thereof;
c) the termination of the Executive's employment by the Company
for cause in accordance with Paragraph 5 hereof; or
d) December 31, 1996; provided, however, that, unless sooner
terminated as otherwise provided herein, the Employment Period shall
automatically be extended for one or more twelve (12) month periods beyond the
then scheduled expiration date thereof unless between the 12th and 6th month
preceding such scheduled expiration date either the Company or the Executive
gives the other written notice of its or his election not to have the
Employment Period so extended.
4. Disability.
For purposes of this Agreement, the Executive will be deemed
"disabled" upon the earlier to occur of (i) his becoming disabled as defined
under the terms of the disability benefit program applicable to the Executive,
if any, and (ii) his absence from his duties hereunder on a full-time basis for
one hundred eighty (180) consecutive days as a result of his incapacity due to
accident or physical or mental illness. If the Executive becomes disabled (as
defined in the preceding sentence), the Employment Period shall terminate on
the last day of the month in which such disability is determined. Until such
termination of the Employment Period, the Company shall continue to pay to the
Executive his base salary, any additional compensation authorized by the
Company's Board of Directors, and
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other remuneration and benefits provided in accordance with Paragraph 2 hereof,
all without delay, diminution or proration of any kind whatsoever (except that
his remuneration hereunder shall be reduced by the amount of any payments he
may otherwise receive as a result of his disability pursuant to a disability
program provided by or through the Company).
In the event that, notwithstanding such a determination of disability,
the Executive is determined not to be totally and permanently disabled prior to
the then scheduled expiration of the Employment Period, the Executive shall be
entitled to resume employment with the Company under the terms of this
Agreement for the then remaining balance of the Employment Period.
5. Termination for Cause.
In the event of any malfeasance, willful misconduct, active fraud or
gross negligence by the Executive in connection with his employment hereunder,
the Company shall have the right to terminate the Employment Period by giving
the Executive notice in writing of the reason for such proposed termination.
If the Executive shall not have corrected such conduct to the satisfaction of
the Company within thirty days after such notice, the Employment Period shall
terminate and the Company shall have no further obligation to the Executive
hereunder but the restriction on the Executive's activities contained in
Paragraph 7 and the obligations of the Executive contained in Paragraphs 8(b)
and 8(c) shall continue in effect as provided therein.
6. Termination Without Cause.
In the event that the Company discharges the Executive during the
Employment Period without cause, the Executive shall be entitled to the salary
provided in Paragraph 2, the full vesting of any restricted stock awards and
the immediate exercisability of any stock options, for the full Employment
Period (which, in that event, shall continue until the then scheduled
expiration of the Employment Period unless sooner terminated by the Executive's
disability or death), and the Company shall have no right to set off payments
due the Executive with any amounts he may earn from gainful employment
elsewhere. It is expressly agreed and understood that the Executive shall be
under no obligation to seek such employment. The provisions of Paragraph 7
restricting the Executive's activities and the Executive's obligations under
Paragraphs 8(b) and 8(c) shall continue in effect. The provisions of this
Paragraph 6 shall not act to limit the Executive's ability to recover damages
from the Company for breaching this Agreement by terminating the Employment
Period without cause, except as
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otherwise permitted by Paragraph 3.
7. Non-Competition; Trade Secrets.
During the Employment Period and for a period of one year after the
termination of the Employment Period, the Executive will not, directly or
indirectly:
a) Disclosure of Information. Use, attempt to use, disclose or
otherwise make known to any person or entity (other than to the Board of
Directors of the Company or otherwise in the course of the business of the
Company, its subsidiaries or affiliates and except as may be required by
applicable law):
i. any knowledge or information, including, without
limitation, lists of customers or suppliers, trade secrets, know-how,
inventions, discoveries, processes and formulae, as well as all data
and records pertaining thereto, which he may acquire in the course of
his employment, in any manner which may be detrimental to or cause
injury or loss to the Company, its subsidiaries or affiliates; or
ii. any knowledge or information of a confidential
nature (including all unpublished matters) relating to, without
limitation, the business, properties, accounting, books and records,
trade secrets or memoranda of the Company, its subsidiaries or
affiliates, which he now knows or may come to know in any manner which
may be detrimental to or cause injury or loss to the Company, its
subsidiaries or affiliates;
b) Non-Competition. Engage or become interested in the United
States, Canada or Mexico (whether as an owner, shareholder, partner, lender or
other investor, director, officer, employee, consultant or otherwise) in the
business of distributing electronic parts, components, supplies or systems, or
any other business that is competitive with the principal business or
businesses then conducted by the Company, its subsidiaries or affiliates
(provided, however, that nothing contained herein shall prevent the Executive
from acquiring or owning less than 1% of the issued and outstanding capital
stock or debentures of a corporation whose securities are listed on the New
York Stock Exchange, American Stock Exchange, or the National Association of
Securities Dealers Automated Quotation System, if such investment is otherwise
permitted by the Company's Human Resource and Conflict of Interest policies);
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c) Solicitation. Solicit or participate in the solicitation of
any business of any type conducted by the Company, its subsidiaries or
affiliates, during said term or thereafter, from any person, firm or other
entity which was or at the time is a supplier or customer, or prospective
supplier or customer, of the Company, its subsidiaries or affiliates; or
d) Employment. Employ or retain, or arrange to have any other
person, firm or other entity employ or retain, or otherwise participate in the
employment or retention of, any person who was an employee or consultant of the
Company, its subsidiaries or affiliates, at any time during the period of
twelve consecutive months immediately preceding such employment or retention.
The Executive will promptly furnish in writing to the Company, its
subsidiaries or affiliates, any information reasonably requested by the Company
(including any third party confirmations) with respect to any activity or
interest the Executive may have in any business.
Except as expressly herein provided, nothing contained herein is
intended to prevent the Executive, at any time after the termination of the
Employment Period, from either (i) being gainfully employed or (ii) exercising
his skills and abilities outside of such geographic areas, provided in either
case the provisions of this Agreement are complied with.
8. Preservation of Business.
a) General. During the Employment Period, the Executive will
use his best efforts to advance the business and organization of the Company,
its subsidiaries and affiliates, to keep available to the Company, its
subsidiaries and affiliates, the services of present and future employees and
to advance the business relations with its suppliers, customers and others.
b) Patents and Copyrights, etc. The Executive agrees, without
additional compensation, to make available to the Company all knowledge
possessed by him relating to any methods, developments, inventions, processes,
discoveries and/or improvements (whether patented, patentable or unpatentable)
which concern in any way the business of the Company, its subsidiaries or
affiliates, whether acquired by the Executive before or during his employment
hereunder.
Any methods, developments, inventions, processes, discoveries and/or
improvements (whether patented, patentable or unpatentable) which the Executive
may conceive of or make, related directly or indirectly to the business or
affairs of the Company, its subsidiaries or affiliates, or any part thereof,
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during the Employment Period, shall be and remain the property of the Company.
The Executive agrees promptly to communicate and disclose all such methods,
developments, inventions, processes, discoveries and/or improvements to the
Company and to execute and deliver to it any instruments deemed necessary by
the Company to effect the disclosure and assignment thereof to it. The
Executive also agrees, on request and at the expense of the Company, to execute
patent applications and any other instruments deemed necessary by the Company
for the prosecution of such patent applications or the acquisition of Letters
Patent in the United States or any other country and for the assignment to the
Company of any patents which may be issued. The Company shall indemnify and
hold the Executive harmless from any and all costs, expenses, liabilities or
damages sustained by the Executive by reason of having made such patent
applications or being granted such patents.
Any writings or other materials written or produced by the Executive
or under his supervision (whether alone or with others and whether or not
during regular business hours), during the Employment Period which are related,
directly or indirectly, to the business or affairs of the Company, its
subsidiaries or affiliates, or are capable of being used therein, and the
copyright thereof, common law or statutory, including all renewals and
extensions, shall be and remain the property of the Company. The Executive
agrees promptly to communicate and disclose all such writings or materials to
the Company and to execute and deliver to it any instruments deemed necessary
by the Company to effect the disclosure and assignment thereof to it. The
Executive further agrees, on request and at the expense of the Company, to take
any and all action deemed necessary by the Company to obtain copyrights or
other protections for such writings or other materials or to protect the
Company's right, title and interest therein. The Company shall indemnify and
hold the Executive harmless from any and all costs, expenses, liabilities or
damages sustained by the Executive by reason of the Executive's compliance with
the Company's request.
c. Return of Documents. Upon the termination of the Employment
Period, including any termination of employment described in Paragraph 6, the
Executive will promptly return to the Company all copies of information
protected by Paragraph 7(a) hereof or pertaining to matters covered by
subparagraph (b) of this Paragraph 8 which are in his possession, custody or
control, whether prepared by him or others.
9. Separability.
The Executive agrees that the provisions of Paragraphs 7 and 8 hereof
constitute independent and separable covenants which shall survive the
termination of the Employment Period and which shall be enforceable by the
Company notwithstanding any
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rights or remedies the Executive may have under any other provisions hereof.
The Company agrees that the provisions of Paragraph 6 hereof constitute
independent and separable covenants which shall survive the termination of the
Employment Period and which shall be enforceable by the Executive
notwithstanding any rights or remedies the Company may have under any other
provisions hereof.
10. Specific Performance.
The Executive acknowledges that (i) the services to be rendered under
the provisions of this Agreement and the obligations of the Executive assumed
herein are of a special, unique and extraordinary character; (ii) it would be
difficult or impossible to replace such services and obligations; (iii) the
Company, its subsidiaries and affiliates will be irreparably damaged if the
provisions hereof are not specifically enforced; and (iv) the award of monetary
damages will not adequately protect the Company, its subsidiaries and
affiliates in the event of a breach hereof by the Executive. The Company
acknowledges that (i) the Executive will be irreparably damaged if the
provisions of Paragraphs 1(b) and 6 hereof are not specifically enforced and
(ii) the award of monetary damages will not adequately protect the Executive in
the event of a breach thereof by the Company. By virtue thereof, the Executive
agrees and consents that if he violates any of the provisions of this
Agreement, and the Company agrees and consents that if it violates any of the
provisions of Paragraphs 1(b) and 6 hereof, the other party, in addition to any
other rights and remedies available under this Agreement or otherwise, shall
(without any bond or other security being required and without the necessity of
proving monetary damages) be entitled to a temporary and/or permanent
injunction to be issued by a court of competent jurisdiction restraining the
breaching party from committing or continuing any violation of this Agreement,
or any other appropriate decree of specific performance. Such remedies shall
not be exclusive and shall be in addition to any other remedy which any of them
may have.
11. Miscellaneous.
a) Entire Agreement; Amendment. This Agreement constitutes
the whole employment agreement between the parties and may not be modified,
amended or terminated except by a written instrument executed by the parties
hereto. It is specifically agreed and understood, however, that the provisions
of that certain letter agreement dated as of the date hereof granting to the
Executive extended separation benefits in the event of a change in control of
the Company, shall survive and shall not be affected hereby. All other
agreements between the
-8-
<PAGE>
parties pertaining to the employment or remuneration of the Executive not
specifically contemplated hereby or incorporated or merged herein are
terminated and shall be of no further force or effect.
b) Assignment. Except as stated below, this Agreement is not
assignable by the Company without the written consent of the Executive, or by
the Executive without the written consent of the Company, and any purported
assignment by either party of such party's rights and/or obligations under this
Agreement shall be null and void; provided, however, that, notwithstanding the
foregoing, the Company may merge or consolidate with or into another
corporation, or sell all or substantially all of its assets to another
corporation or business entity or otherwise reorganize itself, provided the
surviving corporation or entity, if not the Company, shall assume this
Agreement and become obligated to perform all of the terms and conditions
hereof, in which event the Executive's obligations shall continue in favor of
such other corporation or entity.
c) Waivers, etc. No waiver of any breach or default hereunder
shall be considered valid unless in writing, and no such waiver shall be deemed
a waiver of any subsequent breach or default of the same or similar nature.
The failure of any party to insist upon strict adherence to any term of this
Agreement on any occasion shall not operate or be construed as a waiver of the
right to insist upon strict adherence to that term or any other term of this
Agreement on that or any other occasion.
d) Provisions Overly Broad. In the event that any term or
provision of this Agreement shall be deemed by a court of competent
jurisdiction to be overly broad in scope, duration or area of applicability,
the court considering the same shall have the power and hereby is authorized
and directed to modify such term or provision to limit such scope, duration or
area, or all of them, so that such term or provision is no longer overly broad
and to enforce the same as so limited. Subject to the foregoing sentence, in
the event any provision of this Agreement shall be held to be invalid or
unenforceable for any reason, such invalidity or unenforceability shall attach
only to such provision and shall not affect or render invalid or unenforceable
any other provision of this Argeement.
e) Notices. Any notice permitted or required hereunder shall be
in writing and shall be deemed to have been given on the date of delivery or,
if mailed by registered or certified mail, postage prepaid, on the date of
mailing:
i. if to the Executive to:
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<PAGE>
John J. Powers, III
12200 Old Snakey Road
Los Altos Hills, CA 94022
ii. if to the Company to:
Arrow Electronics, Inc.
25 Hub Drive
Melville, New York 11747
Attention: Senior Vice President
and General Counsel
Either party may, by notice to the other, change his or its address for notice
hereunder.
f) New York Law. This Agreement shall be construed and governed
in all respects by the internal laws of the State of New York, without giving
effect to principles of conflicts of law.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
Attest: ARROW ELECTRONICS, INC.
By:
----------------------------- ---------------------
Secretary
THE EXECUTIVE
/s/ JOHN J. POWERS, III
------------------------
John J. Powers, III
-10-
EXHIBIT 10(c)(x)
EMPLOYMENT AGREEMENT made as of the 21st day of September, 1994 by and
between ARROW ELECTRONICS, INC., a New York corporation with its principal
office at 25 Hub Drive, Melville, New York 11747 (the "Company"), and ROBERT S.
THROOP, residing at 3 Eucalyptus Court, Woodside, CA 94062 (the "Executive").
WHEREAS, the Executive is now and has been employed by Anthem
Electronics, Inc. ("Anthem") as its Chairman of the Board of Directors, with
the responsibilities and duties of a principal executive officer of Anthem; and
WHEREAS, the Company and the Executive wish to provide for the
continued employment of the Executive as an employee of Anthem and for him to
continue to render services to Anthem and the Company on the terms set forth
in, and in accordance with the provisions of, this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties agree as follows:
1. Employment and Duties.
a) Employment. The Company hereby employs the Executive for the
Employment Period defined in Paragraph 3, to perform such duties for the
Company, its subsidiaries and affiliates and to hold such offices as may be
specified from time to time by the Company's Board of Directors, subject to the
following provisions of this Agreement. The Executive hereby accepts such
employment.
b) Duties and Responsibilities through 1996. During the Initial
Period (as defined in Paragraph 3), it is contemplated that the Executive will
serve as the Chairman of the Board of Directors of Anthem but the Board of
Directors shall have the right to adjust the duties, responsibilities and title
of the Executive as the Board of Directors may from time to time deem to be in
the interests of the Company (provided, however, that they remain commensurate
with his duties and responsibilities as they exist on the date hereof). If the
Board of Directors does not either continue the Executive in the office of
Chairman of the Board of Directors of Anthem during the Initial Period or elect
him to some other principal executive office satisfactory to the Executive, or
does not provide him in any such case with duties and responsibilities
commensurate with such an office, the Executive shall have the right to decline
to give further service to the Company and shall have the rights and
obligations which would accrue to him under Paragraph 8 if he were discharged
without cause. If the Executive decides to exercise such right to decline to
give further service, he shall within thirty days after such action or omission
by the Board of Directors give written notice to
<PAGE>
the Company stating his objection and the action he thinks necessary to correct
it, and he shall permit the Company to have a thirty day period in which to
correct its action or omission. If the Company makes a correction satisfactory
to the Executive, the Executive shall be obligated to continue to serve the
Company. If the Company does not make such a correction, the Executive's
rights and obligations under Paragraph 8 shall accrue at the expiration of such
thirty day period.
c) Duties and Responsibilities from 1996 through 2001. During
the Transition Period (as defined in Paragraph 3), the Executive shall remain
an employee of the Company and shall hold himself available to advise the
Company with respect to significant matters similar to those with respect to
which he has been involved on the Company's behalf at the close of the Initial
Period.
d) Time Devoted to Duties. Except as otherwise provided under
this Agreement, the Executive shall devote substantially all of his normal
business time and efforts during the Initial Period to the business of the
Company, its subsidiaries and its affiliates, the amount of such time to be
sufficient, in his discretion, to permit him diligently and faithfully to serve
and endeavor to further their interests to the best of his ability. During the
Transition Period, the Executive shall devote such reduced amount of time to
the business of the Company, its subsidiaries and its affiliates as the Board
of Directors and the Executive may from time to time agree. Subject to the
foregoing, it is expressly agreed and understood that the Executive may
participate in various civic and philanthropic activities and may serve on
boards of directors and committees of not-for-profit organizations of the
Executive's choice.
e) Nomination to Board. The Executive shall be nominated for a
position on the Board of Directors during the entire Employment Period.
2. Compensation.
a) Monetary Remuneration and Benefits through 1996.
During the Initial Period, the Company shall pay to the Executive for all
services rendered by him in any capacity:
i. a minimum base salary of $500,000 per year (payable
in accordance with the Company's then prevailing practices, but in no
event less frequently than in equal monthly installments), subject to
increase if the Board of Directors of the Company in its sole
discretion so determines;
-2-
<PAGE>
ii. such additional compensation by way of salary or
bonus or fringe benefits as the Board of Directors of the Company in
its sole discretion shall authorize or agree to pay, payable on such
terms and conditions as it shall determine;
iii. such employee benefits that are made available by
the Company to the other principal executives of Anthem.
b) Monetary Remuneration and Benefits from 1996 through 2001.
During the Transition Period, the Company shall pay to the Executive for all
services rendered by him in any capacity:
i. a base salary of $225,000 per year (payable in
accordance with the Company's then prevailing
practices, but in no event less frequently than in
equal monthly installments); and
ii. such employee benefits that are made available by
Anthem to its employees in general.
c) Additional Compensation. During the Employment Period, the
Board of Directors may grant to the Executive such additional compensation as
it determines. Such additional compensation may be in cash, stock options,
restricted stock or any other form in its discretion.
d) Automobile. During the Initial Period, the Company will pay
the Executive a monthly automobile allowance equal to the highest such
allowance paid to any other executive(s) of the Company, but not less than
$1,150.
e) Vacation. During the Employment Period, the Executive will
be given four weeks vacation with full pay each year, to be taken at the
Executive's discretion; provided, however, that the Executive will use his best
efforts to ensure that such vacation does not unduly interfere with the
operation and performance of the business of the Company, its subsidiaries or
its affiliates.
f) Expenses. During the Employment Period, the Company agrees
to reimburse the Executive, upon the submission of appropriate vouchers, for
out-of-pocket expenses (including, without limitation, expenses for travel,
lodging and entertainment) incurred by the Executive in the course of his
duties hereunder.
g) Office and Staff. The Company will provide the
-3-
<PAGE>
Executive with an office, secretary and such other facilities as may be
reasonably required for the proper discharge of his duties hereunder. Such
office shall be located at the executive offices of Anthem.
h) Indemnification. The Company agrees to indemnify the
Executive for any and all liabilities to which he may be subject as a result of
his employment hereunder (and as a result of his service as an officer or
director of the Company, or as an officer or director of any of its
subsidiaries or affiliates), as well as the costs of any legal action brought
or threatened against him as a result of such employment, to the fullest extent
permitted by law.
i) Participation in Plans. During the Employment Period,
notwithstanding any other provision of this Agreement, the Executive shall have
the right to participate in any and all of the plans or programs made available
by Anthem to, or for the benefit of, executives or employees in general.
j) Effect on Other Agreements. Changes in compensation, title
and responsibility incident to the commencement of the Transition Period shall
not, in themselves, entitle the Executive to terminate his employment for Good
Reason within the meaning of the agreement between the Executive and the
Company dated September 21, 1994 (relating to the rights of the parties in the
event of a "change of control" as therein defined).
3. The Employment Period.
The "Employment Period", as used in the Agreement, shall mean the
period beginning as of the date hereof and terminating on the last day of the
calendar month in which the first of the following occurs:
a) the death of the Executive;
b) the disability of the Executive as determined in accordance
with Paragraph 4 hereof and subject to the provisions thereof;
c) the termination of the Executive's employment by the Company
for cause in accordance with Paragraph 6 hereof; or
d) December 31, 2001.
The portion of the Employment Period ending December 31, 1996 (or earlier, if
applicable), is herein called the "Initial
-4-
<PAGE>
Period", and the portion of the Employment Period after December 31, 1996 is
herein called the "Transition Period".
4. Disability.
For purposes of this Agreement, the Executive will be deemed
"disabled" upon the earlier to occur of (i) his becoming disabled as defined
under the terms of the disability benefit program applicable to the Executive,
if any, and (ii) his absence from his duties hereunder on a full-time basis for
one hundred eighty (180) consecutive days as a result of his incapacity due to
accident or physical or mental illness. If the Executive becomes disabled (as
defined in the preceding sentence), the Employment Period shall terminate on
the last day of the month in which such disability is determined. Until such
termination of the Employment Period, the Company shall continue to pay to the
Executive his base salary, any additional compensation authorized by the
Company's Board of Directors, and other remuneration and benefits provided in
accordance with Paragraph 2 hereof, all without delay, diminution or proration
of any kind whatsoever (except that his remuneration hereunder shall be reduced
by the amount of any payments he may otherwise receive as a result of his
disability pursuant to a disability program provided by or through the
Company).
In the event that, notwithstanding such a determination of disability,
the Executive is determined not to be totally and permanently disabled prior to
the then scheduled expiration of the Employment Period, the Executive shall be
entitled to resume employment with the Company under the terms of this
Agreement for the then remaining balance of the Employment Period.
5. Parachute Payments.
The Executive and the Company have simultaneously executed an
agreement between the Executive and the Company dated September 21, 1994
relating to the rights of the parties in the event of a "change of control" of
the Company as therein defined, which is comparable to similar agreements
between the Company and certain other principal executive officers.
6. Termination for Cause.
In the event of any malfeasance, willful misconduct, active fraud or
gross negligence by the Executive in connection with his employment hereunder,
the Company shall
-5-
<PAGE>
have the right to terminate the Employment Period by giving the Executive
notice in writing of the reason for such proposed termination. If the
Executive shall not have corrected such conduct to the satisfaction of the
Company within thirty days after such notice, the Employment Period shall
terminate and the Company shall have no further obligation to the Executive
hereunder but the restriction on the executive's activities contained in
Paragraph 9 and the obligations of the Executive contained in Paragraph 10(b)
and 10(c) shall continue in effect as provided therein.
7. Death Benefit.
During the Employment Period, the Executive shall participate in such
group life insurance or death benefit arrangements as may, from time to time,
be extended to executive officers of Anthem generally.
8. Termination Without Cause.
In the event that the Company discharges the Executive without cause,
the Executive shall be entitled to the salary provided in Paragraph 2, the full
vesting of any restricted stock awards and the immediate exercisability of any
stock options, as well as his rights under Paragraphs 4 and 7, for the full
Employment Period (which, in that event, shall continue until December 31, 2001
unless sooner terminated by the Executive's disability or death). The Company
shall have no right to set off payments due the Executive with any amounts he
may earn from gainful employment elsewhere. It is expressly agreed and
understood that the Executive shall be under no obligation to seek such
employment. The provisions of Paragraph 9 restricting the Executive's
activities and Executive's obligations under Paragraph 10(b) and 10(c) shall
continue in effect. The provisions of this Paragraph 8 shall not act to limit
the Executive's ability to recover damages from the Company for breaching this
agreement by terminating the Employment Agreement without cause, except as
otherwise permitted by Paragraph 3.
9. Non-Competition; Trade Secrets.
During the Employment Period and for a period of two years after the
termination of the Employment Period, the Executive will not, directly or
indirectly:
a) Disclosure of Information. Use, attempt to use, disclose or
otherwise make known to any person or entity
-6-
<PAGE>
(other than to the Board of Directors of the Company or otherwise in the course
of the business of the Company, its subsidiaries or affiliates and except as
may be required by applicable law):
i. any knowledge or information, including, without
limitation, lists of customers or suppliers, trade secrets, know-how,
inventions, discoveries, processes and formulae, as well as all data
and records pertaining thereto, which he may acquire in the course of
his employment, in any manner which may be detrimental to or cause
injury or loss to the Company, its subsidiaries or affiliates; or
ii. any knowledge or information of a confidential
nature (including all unpublished matters) relating to, without
limitation, the business, properties, accounting, books and records,
trade secrets or memoranda of the Company, its subsidiaries or
affiliates, which he now knows or may come to know in any manner which
may be detrimental to or cause injury or loss to the Company its
subsidiaries or affiliates.
b) Non-Competition. Engage or become interested in the United
States, Canada or Mexico (whether as an owner, shareholder, partner, lender or
other investor, director, officer, employee, consultant or otherwise) in the
business of distributing electronic parts, components, supplies or systems, or
any other business that is competitive with the principal business or
businesses then conducted by the Company, its subsidiaries or affiliates;
c) Solicitation. Solicit or participate in the solicitation of
any business of any type conducted by the Company, its subsidiaries or
affiliates, during said term or thereafter, from any person, firm or other
entity which was or at the time is a supplier or customer, or prospective
supplier or customer, of the Company, its subsidiaries or affiliates; or
d) Employment. Employ or retain, or arrange to have any other
person, firm or other entity employ or retain, or otherwise participate in the
employment or retention of, any person who was an employee or consultant of the
Company, its subsidiaries or affiliates, at any time during the period of
twelve consecutive months immediately preceding such employment or retention.
The Executive will promptly furnish in writing to the Company, its
subsidiaries or affiliates, any information reasonably requested by the Company
(including any third party
-7-
<PAGE>
confirmations) with respect to any activity or interest the Executive may have
in any business.
Except as expressly herein provided, nothing contained herein is
intended to prevent the Executive, at any time after the termination of the
Employment Period, from either (i) being gainfully employed or (ii) exercising
his skills and abilities outside of such geographic areas, provided in either
case the provisions of this Agreement are complied with.
10. Preservation of Business.
a) General. During the Employment Period and subject to
Paragraph 1(d) hereof, the Executive will use his best efforts to advance the
business and organization of the Company, its subsidiaries and affiliates, to
keep available to the Company, its subsidiaries and affiliates, the services of
present and future employees and to advance the business relations with its
suppliers, distributors, customers and others.
b) Patents and Copyrights, etc. The Executive agrees, without
additional compensation, to make available to the Company all knowledge
possessed by him relating to any methods, developments, inventions, processes,
discoveries and/or improvements (whether patented, patentable or unpatentable)
which concern in any way the business of the Company, it subsidiaries or
affiliates, whether acquired by the Executive before or during his employment
or retention hereunder.
Any methods, developments, inventions, processes, discoveries and/or
improvements (whether patented, patentable or unpatentable) which the Executive
may conceive of or make, related directly or indirectly to the business or
affairs of the Company, its subsidiaries or affiliates, or any part thereof,
during the Employment Period, shall be and remain the property of the Company.
The Executive agrees promptly to communicate and disclose all such methods,
developments, inventions, processes, discoveries and/or improvements to the
Company and to execute and deliver to it any instruments deemed necessary by
the Company to effect the disclosure and assignment thereof to it. The
Executive also agrees, on request and at the expense of the Company, to execute
patent applications and any other instruments deemed necessary by the Company
for the prosecution of such patent applications or the acquisition of Letters
Patent in the United States or any other country and for the assignment to the
Company of any patents which may be issued. The Company shall indemnify and
hold the Executive harmless from any and all costs, expenses, liabilities or
damages sustained by the Executive by reason of having made such patent
application or being granted such patents.
-8-
<PAGE>
Any writings or other materials written or produced by the Executive
or under his supervision (whether alone or with others and whether or not
during regular business hours), during the Employment Period which are related,
directly or indirectly, to the business or affairs of the Company, its
subsidiaries or affiliates, or are capable of being used therein, and the
copyright thereof, common law or statutory, including all renewals and
extensions, shall be and remain the property of the Company. The Executive
agrees promptly to communicate and disclose all such writings or materials to
the Company and to execute and deliver to it any instruments deemed necessary
by the Company to effect the disclosure and assignment thereof to it. The
Executive further agrees, on request and at the expense of the Company, to take
any and all action deemed necessary by the Company to obtain copyrights or
other protections for such writings or other materials or to protect the
Company's right, title and interest therein. The Company shall indemnify and
hold the Executive harmless from any and all costs, expenses, liabilities or
damages sustained by the Executive by reason of the Executive's compliance with
the Company's request.
c. Return of Documents. Upon the termination of the Employment
Period, including any termination of employment described in Paragraph 8 and
any termination of employment described in Paragraph 1(e), the Executive will
promptly return to the Company all copies of information protected by Paragraph
9(a) hereof or pertaining to matters covered by subparagraph (b) of this
Paragraph 10 which are in his possession, custody or control, whether prepared
by him or others.
11. Separability.
The Executive agrees that the provisions of Paragraphs 9 and 10 hereof
constitute independent and separable covenants which shall survive the
termination of the Employment Period and which shall be enforceable by the
Company notwithstanding any rights or remedies the Executive may have under any
other provisions hereof. The Company agrees that the provisions of Paragraphs
4, 7 and 8 hereof constitute independent and separable covenants which shall
survive the termination of the Employment Period and which shall be enforceable
by the Executive notwithstanding any rights or remedies the Company may have
under any other provisions hereof.
12. Specific Performance.
The Executive acknowledges that (i) the services to be rendered under
the provisions of this Agreement and the obligations of the Executive assumed
herein are of a special, unique and extraordinary character; (ii) it would be
difficult
-9-
<PAGE>
or impossible to replace such services and obligations; (iii) the Company, it
subsidiaries and affiliates will be irreparably damaged if the provision hereof
are not specifically enforced; and (iv) the award of monetary damages will not
adequately protect the Company, its subsidiaries and affiliates in the event of
a breach hereof by the Executive. The Company acknowledges that (i) the
Executive will be irreparably damaged if the provisions of Paragraphs 1(b), 4,
7, 8 and 13 hereof are not specifically enforced; and (ii) the award of
monetary damages will not adequately protect the Executive in the event of a
breach thereof by the Company. By virtue thereof, the Executive agrees and
consents that if he violates any of the provisions of this Agreement, and the
Company agrees and consents that if it violates any of the provisions of
Paragraphs 1(b), 4, 7, 8 and 13 hereof, the other party, in addition to any
other rights and remedies available under this Agreement or otherwise, shall
(without any bond or other security being required and without the necessity of
proving monetary damages) be entitled to a temporary and/or permanent
injunction to be issued by a court of competent jurisdiction restraining the
breaching party from committing or continuing any violation of this Agreement,
or any other appropriate decree of specific performance. Such remedies shall
not be exclusive and shall be in addition to any other remedy which any of them
may have.
13. No Participation in Supplemental Retirement Plan.
The parties agree the Executive does not fall within the class of
employees eligible to participate in the Company's Supplemental Executive
Retirement Plan (SERP) and will not be a participant therein.
14. Assistance in Litigation.
During the term of this Agreement or at any time thereafter, the
Executive shall, upon reasonable notice, furnish such information and proper
assistance to the Company as may reasonably be required by the Company in
connection with any litigation in which it or any of its subsidiaries or
affiliates is, or may become, a party.
15. Reimbursement of Legal Expenses.
In the event that any dispute shall arise between the Executive and
the Company relating to his rights under this Agreement, and it is determined
by agreement between the parties, or by a final judgment of a court of
competent jurisdiction that is no longer subject to appeal, that the Executive
has been substantially successful in his claims,
-10-
<PAGE>
reasonable legal fees and disbursements of the executive in connection with
such dispute shall be paid by the Company.
16. Miscellaneous.
a) Entire Agreement; Amendment. This Agreement constitutes the
whole employment agreement between the parties and may not be modified, amended
or terminated except by a written instrument executed by the parties hereto.
All other agreements between the parties pertaining to the employment or
remuneration of the Executive not specifically contemplated hereby or
incorporated or merged herein are terminated and shall be of no further force
or effect.
b) Assignment. Except as stated below, this Agreement is not
assignable by the Company without the written consent of the Executive, or by
the Executive without the written consent of the Company, and any purported
assignment by either party of such party's rights and/or obligations under this
Agreement shall be null and void; provided, however, that, notwithstanding the
foregoing, the Company may merge or consolidate with or into another
corporation, or sell all or substantially all of its assets to another
corporation or business entity or otherwise reorganize itself, provided the
surviving corporation or entity, if not the Company, shall assume this
Agreement and become obligated to perform all of the terms and conditions
hereof, in which event the Executive's obligations shall continue in favor of
such other corporation or entity, subject however to the provisions of
Paragraph 3.
c) Waivers, etc, No waiver of any breach or default hereunder
shall be considered valid unless in writing, and no such waiver shall be deemed
a waiver of any subsequent breach or default of the same or similar nature.
The failure of any party to insist upon strict adherence to any term of this
Agreement on any occasion shall not operate or be construed as a waiver of the
right to insist upon strict adherence to that term of any other term of this
Agreement on that or any other occasion.
d) Provisions Overly Broad. In the event that any term or
provision of this Agreement shall be deemed by a court of competent
jurisdiction to be overly broad in scope, duration or area of applicability,
the court considering the same shall have the power and hereby is authorized
and directed to modify such term or provision to limit such scope, duration or
area, or all of them, so that such term or provision is no longer overly board
and to enforce the same as so limited. Subject to the foregoing sentence, in
the event any provision of this Agreement shall be held to be invalid or
unenforceable for any reason, such invalidity or unenforceability shall attach
only to such provision and shall not affect or render invalid or
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<PAGE>
unenforceable any other provision of this Agreement.
e) Notices. Any notice permitted or required hereunder shall be
in writing and shall be deemed to have been given on the date of delivery or,
if mailed by registered or certified mail, postage prepaid, on the date of
mailing:
i. if to the Executive to:
Robert S. Throop
3 Eucalyptus Court
Woodside, CA 94062
ii. if to the Company to:
Arrow Electronics, Inc.
25 Hub Drive
Melville, New York 11747
Attention: General Counsel
Either party may, by notice to the other, change his or its address for notice
hereunder.
f) New York Law. This Agreement shall be construed and governed
in all respects by the internal laws of the State of New York, without giving
effect to principles of conflicts of law.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
Attest: ARROW ELECTRONICS, INC.
/s/ ROBERT E. KLATELL By: /s/ STEPHEN P. KAUFMAN
-------------------- ----------------------
Secretary President
THE EXECUTIVE
/s/ ROBERT S. THROOP
--------------------
Robert S. Throop
-12-
EXHIBIT 10(c)(xiii)
UNFUNDED PENSION PLAN
FOR SELECTED EXECUTIVES OF ARROW ELECTRONICS, INC.
EFFECTIVE JANUARY 1, 1990
EDITION OF MARCH 1, 1995
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE Page
----
<S> <C> <C>
1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Beneficiary . . . . . . . . . . . . . . . . . . . . . 1
1.2 Board . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Change in Control Termination . . . . . . . . . . . . 2
1.4 Code . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Committee . . . . . . . . . . . . . . . . . . . . . . 2
1.6 Company . . . . . . . . . . . . . . . . . . . . . . . 2
1.7 Disability Benefits . . . . . . . . . . . . . . . . . 2
1.8 Early Retirement Date . . . . . . . . . . . . . . . . 3
1.9 Early Retirement Pension . . . . . . . . . . . . . . 3
1.10 Effective Date . . . . . . . . . . . . . . . . . . . 3
1.11 Employer . . . . . . . . . . . . . . . . . . . . . . 3
1.12 ERISA . . . . . . . . . . . . . . . . . . . . . . . . 3
1.13 Normal Retirement Date . . . . . . . . . . . . . . . . 3
1.14 Normal Retirement Pension. . . . . . . . . . . . . . . 3
1.15 Participant . . . . . . . . . . . . . . . . . . . . . 4
1.16 Plan . . . . . . . . . . . . . . . . . . . . . . . . 4
1.17 Plan Year . . . . . . . . . . . . . . . . . . . . . . 4
1.18 Retirement Pension . . . . . . . . . . . . . . . . . 4
1.19 Service . . . . . . . . . . . . . . . . . . . . . . . 4
1.20 Supplement . . . . . . . . . . . . . . . . . . . . . 5
1.21 Termination of Employment . . . . . . . . . . . . . . 5
1.22 Total Disability . . . . . . . . . . . . . . . . . . 5
2 PARTICIPATION . . . . . . . . . . . . . . . . . . . . . . . . 6
2.1 Participation . . . . . . . . . . . . . . . . . . . . 6
2.2 Termination of Further Accruals . . . . . . . . . . . 6
3 RETIREMENT PENSIONS . . . . . . . . . . . . . . . . . . . . 7
3.1 Normal Retirement Pension . . . . . . . . . . . . . . 7
3.2 Early Retirement Pension . . . . . . . . . . . . . . 7
3.3 Reduction for Disability Payments . . . . . . . . . . 8
3.4 Change in Control Pension . . . . . . . . . . . . . . 8
3.5 No Benefits prior to Early Retirement . . . . . . . . 8
3.6 Method of Payment . . . . . . . . . . . . . . . . . . 8
3.7 Noncompetition . . . . . . . . . . . . . . . . . . . 9
4 DEATH BENEFIT . . . . . . . . . . . . . . . . . . . . . . . 10
4.1 Death Benefit for Participants Receiving Benefits . . 10
4.2 No Other Death Benefits . . . . . . . . . . . . . . . 10
</TABLE>
- i -
<PAGE>
<TABLE>
<CAPTION>
ARTICLE Page
----
<S> <C>
5 AMENDMENT AND TERMINATION . . . . . . . . . . . . . . . . . 10
5.1 Right Reserved . . . . . . . . . . . . . . . . . . . . 10
5.2 Restrictions on Board Action . . . . . . . . . . . . . 10
5.3 Action to Bind Employers . . . . . . . . . . . . . . . 11
6 COMMITTEE . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.1 Establishment of Committee; Authority . . . . . . . . 11
6.2 Powers of Committee . . . . . . . . . . . . . . . . . 12
6.3 Determinations by Committee . . . . . . . . . . . . . 12
6.4 Directions to Pay Benefits . . . . . . . . . . . . . . 12
6.5 Liability Limited; Indemnification . . . . . . . . . . 12
7 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 13
7.1 Payment to Incompetent . . . . . . . . . . . . . . . . 13
7.2 Doubt as to Right to Payment . . . . . . . . . . . . . 14
7.3 Withholding . . . . . . . . . . . . . . . . . . . . . 14
7.4 Source of Payment . . . . . . . . . . . . . . . . . . 14
7.5 Spendthrift Clause . . . . . . . . . . . . . . . . . . 15
7.6 Reimbursement of Legal Expenses . . . . . . . . . . . 15
7.7 Usage . . . . . . . . . . . . . . . . . . . . . . . . 16
7.8 Data . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.9 Separability . . . . . . . . . . . . . . . . . . . . . 16
7.10 Captions . . . . . . . . . . . . . . . . . . . . . . . 16
7.11 Name . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.12 Governing Law . . . . . . . . . . . . . . . . . . . . 17
7.13 Right of Discharge Reserved . . . . . . . . . . . . . 17
Exhibit A . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Supplement No. 1 . . . . . . . . . . . . . . . . . . . . . . . . . 19
Supplement No. 2 . . . . . . . . . . . . . . . . . . . . . . . . . 20
Supplement No. 3 . . . . . . . . . . . . . . . . . . . . . . . . . 21
Supplement No. 4 . . . . . . . . . . . . . . . . . . . . . . . . . 22
Supplement No. 5 . . . . . . . . . . . . . . . . . . . . . . . . . 23
</TABLE>
- ii -
<PAGE>
PREAMBLE
Effective January 1, 1990, Arrow Electronics, Inc. adopted the
Unfunded Pension Plan for Selected Executives of Arrow Electronics, Inc. (the
"Plan") in order to provide retirement benefits for a selected group of its
executives. This document describes the benefits available under the Plan and
is intended to represent a binding obligation of Arrow Electronics, Inc. (and
any other Employer of the executive) to provide those benefits, subject to the
terms and conditions of the Plan as from time to time in effect. The Plan
reads as follows:
ARTICLE I
DEFINITIONS
The following words and phrases, as used herein, shall have the
following meanings, unless a different meaning is otherwise expressly provided
or plainly required by the context:
1.1 Beneficiary. The person (including a trust, estate,
foundation, or other entity) designated by the Participant (at such time and in
such manner as the Committee shall authorize) to receive the death benefit
described in Article 4. If an individual is designated as Beneficiary and dies
prior to becoming entitled to benefits hereunder (or if no valid designation of
Beneficiary is in effect for any other reason), the Beneficiary shall be the
Participant's estate unless otherwise provided in the Beneficiary designation.
<PAGE>
1.2 Board. The Board of Directors of the Company, or any duly
authorized committee thereof.
1.3 Change in Control Termination. In the case of a Participant
who, pursuant to an employment agreement, is entitled to additional benefits in
the event of employment termination for certain reasons following a change in
the ownership or control of the Company, (i) the involuntary termination of the
Participant's employment other than for Cause or Disability, or (ii) the
voluntary termination of the Participant's employment for Good Reason (as each
of such capitalized terms is defined in such agreement), in either case within
24 months after such change.
1.4 Code. The Internal Revenue Code of 1986, as amended from
time to time. Reference to a specific provision of the Code shall include such
provision, any valid regulation or ruling promulgated thereunder, and any
comparable provision of future law that amends, supplements or supersedes such
provision.
1.5 Committee. The Committee established pursuant to Article 6.
1.6 Company. Arrow Electronics, Inc., a New York Corporation, or
any successor thereof by merger, consolidation, purchase of substantially all
of the business and assets of the Company, or otherwise.
1.7 Disability Benefits. Amounts payable to a Participant from
an Employer (or Employer-paid insurance policy) on account of Total Disability.
- 2 -
<PAGE>
1.8 Early Retirement Date. The first day of the month coincident
with or next following the date on which a Participant (a) has been a
Participant for at least five years and (b) has attained age 50 and (c) has
completed a number of years of Service such that, when such years of Service
are added to the Participant's age, the total is at least 72.
1.9 Early Retirement Pension. A Retirement Pension payable
pursuant to Section 3.2.
1.10 Effective Date. January 1, 1990.
1.11 Employer. The Company, and any subsidiary or affiliate that
adopts the Plan with the approval of the Company.
1.12 ERISA. The Employee Retirement Income Security Act of 1974,
as amended from time to time. Reference to a specific provision of ERISA shall
include such provision, any valid regulation or ruling promulgated thereunder
and any comparable provision of future law that amends, supplements, or
supersedes such provision.
1.13 Normal Retirement Date. The first day of the month
coincident with or next following the earlier of a Participant's 60th birthday
or the date on which the Participant's age plus completed years of Service
equal at least 90.
1.14 Normal Retirement Pension. The maximum annual Retirement
Pension that a Participant may receive under this
- 3 -
<PAGE>
Plan. Unless otherwise determined by the Board and set forth in a Supplement,
the Normal Retirement Pension of a Participant shall be an annual amount equal
to $6,000 multiplied by the Participant's years (and any fraction of a year) of
Service; provided, however, that no Participant's Normal Retirement Pension
determined pursuant to this formula may exceed $175,000.
1.15 Participant. An individual who has been admitted to
participation in the Plan by the Board in accordance with Article II.
1.16 Plan. The Unfunded Pension Plan for Selected Executives of
Arrow Electronics, Inc., as in effect from time to time.
1.17 Plan Year. The calendar year.
1.18 Retirement Pension. A life annuity payable to a Participant
under this Plan, guaranteed for 5 years as provided in Section 4.1.
1.19 Service. The number of an employee's aggregate years of
service with an Employer. Service shall include any years during which a
Participant receives Disability Benefits if the Participant's Total Disability
continues to the Participant's Normal Retirement Date or to any earlier date on
which the Participant begins to receive an Early Retirement Pension, but
excluding any years after such Normal Retirement Date or earlier date. If the
Total Disability of a Participant terminates prior to the Participant's Normal
Retirement Date (or such earlier
- 4 -
<PAGE>
date, if applicable), the period of Total Disability shall be credited for the
purpose of determining Service only if the Participant (i) returns to service
with an Employer, or (ii) is not offered employment with an Employer which is
comparable to the position held prior to the Total Disability.
1.20 Supplement. A supplement to this Plan which sets forth some
of the terms and conditions applicable to one or more specified Participants.
1.21 Termination of Employment. References under this Plan to a
termination of employment, or to a Participant or employee who terminates
employment, or the like, mean an employee's ceasing to be in the active employ
of an Employer for any reason, including quit, discharge, disability, death, or
retirement.
1.22 Total Disability. "Total Disability" as defined in any
individual disability income policy maintained by an Employer for the benefit
of the Participant or, if no such policy is maintained, in the disability
income plan maintained for executive employees of the Company or another
Employer as evidenced by a disability income agreement with the Participant.
- 5 -
<PAGE>
ARTICLE 2
PARTICIPATION
2.1 Participation. The Board may, in its discretion, admit an
employee to participation in the Plan, as of such date as the Board may
determine. Once so admitted, an employee shall continue to be a Participant
and accrue benefits under this Plan until termination of employment with an
Employer, subject to Section 2.2. Notwithstanding the foregoing, no employee
may become a Participant who is not a member of a "select group of management
or highly compensated employees" within the meaning of sections 201(2),
301(a)(3) and 401(a)(1) of ERISA. The names of the Participants shall be set
forth from time to time in Exhibit A hereto.
2.2 Termination of Further Accruals. The Board may direct that
any Participant cease to accrue additional benefits as of any date coincident
with or following such Board action.
- 6 -
<PAGE>
ARTICLE 3
RETIREMENT PENSIONS
3.1 Normal Retirement Pension. A Participant whose employment
terminates on or after the Participant's Normal Retirement Date shall receive a
Normal Retirement Pension beginning as of the first day of the month coincident
with or next following the date of termination. For purposes of this Section
3.1, a Participant whose employment terminates prior to the Normal Retirement
Date on account of Total Disability shall be treated as having terminated
employment on the Normal Retirement Date if such Total Disability does not
terminate prior to the Normal Retirement Date and the Participant does not
elect to receive an Early Retirement Pension under Section 3.2.
3.2 Early Retirement Pension. A Participant whose employment
terminates after the Participant's Early Retirement Date and prior to the
Normal Retirement Date shall receive an Early Retirement Pension beginning as
of the first day of the month coincident with or next following such
termination. The annual amount of such Early Retirement Pension shall be equal
to such Participant's Normal Retirement Pension reduced by 8.75% for each full
year and .729% for each month in any remaining portion of a year by which the
commencement of the Early Retirement Pension precedes the Participant's Normal
Retirement Date. If a Participant's employment terminates for reason of Total
Disability, an Early Retirement Pension shall not begin without
- 7 -
<PAGE>
the Participant's prior written consent during any period for which Disability
Benefits are received.
3.3 Reduction for Disability Payments. A Participant's
Retirement Pension shall be reduced by the amount (if any) of the Participant's
Disability Benefits.
3.4 Change in Control Pension. A Participant who incurs a Change
in Control Termination after attaining age 50 and completing at least 15 years
of Service shall receive a Retirement Pension, beginning as of the first day of
the month coincident with or next following such termination, in an amount
equal to the Participant's Normal Retirement Pension, with no reduction for
early payment. A Participant who is not party to an agreement described in
Section 1.3 shall not be eligible for a Retirement Pension under this Section
3.4. Without the Participant's written consent, no action by the Company during
the period of time during which such an agreement is in effect may adversely
affect the Participant's rights under this Section 3.4.
3.5 No Benefits prior to Early Retirement. Except as provided in
Section 3.4, a Participant whose employment terminates prior to the
Participant's Early Retirement Date (or Normal Retirement Date) shall receive
no benefits from this Plan.
3.6 Method of Payment. A Participant's annual Retirement Pension
shall be paid in twelve equal monthly
- 8 -
<PAGE>
installments, and shall be paid up to and including the month in which the
Participant dies.
3.7 Noncompetition. All rights of a Participant under this Plan
shall terminate, and no further payments of any Retirement Pension shall be
made to the Participant or the Participant's Beneficiary, in the event that,
following termination of employment, the Participant directly or indirectly,
alone, as an employee, agent, independent contractor, lender, consultant,
owner, partner or joint venturer, or as an officer, director or stockholder of
any corporation, or otherwise, is employed by, participates in, is engaged in,
or is connected with any person or entity which is engaged in a business of the
type and character engaged in, and competitive with that conducted, by the
Company. Ownership of 3% or less of the stock or other securities of a
corporation, the stock of which is listed on a national securities exchange or
is quoted on the NASDAQ National Market, shall not constitute a violation of
this provision, so long as the Participant does not in fact have the power to
control, or direct the management of, or is not otherwise associated with, such
corporation.
- 9 -
<PAGE>
ARTICLE 4
DEATH BENEFIT
4.1 Death Benefit for Participant Receiving Benefits. If a
Participant whose Retirement Pension has commenced dies prior to the receipt of
60 monthly payments, the Participant's Beneficiary shall be entitled to receive
monthly payments in the same amount as the Participant received prior to death
(determined before the application of Section 3.3) until 60 monthly payments
have been made to the Participant and Beneficiary in the aggregate.
4.2 No Other Death Benefits. Except for the death benefit
provided under Section 4.1, no death benefit shall be paid under this Plan.
ARTICLE 5
AMENDMENT AND TERMINATION
5.1 Right Reserved. Subject to Section 5.2, the Company, by
action of the Board, may at any time amend the Plan in any respect or terminate
the Plan, provided that no Retirement Pension which is in pay status as of the
date of amendment or Plan termination (or death benefits in respect thereof)
shall be reduced thereby.
5.2 Restrictions on Board Action. Without the express written
consent of the Participant, no action taken by the Board pursuant to Section
2.2 or 5.1 shall (i) reduce a Participant's Normal Retirement Pension below the
amount of the Participant's
- 10 -
<PAGE>
Normal Retirement Pension determined immediately prior to such action under the
terms of the Plan then in effect as if his employment had terminated on such
date, nor (ii) adversely affect the right of the Participant (and the
Participant's Beneficiary) to receive payment in respect of such Normal
Retirement Pension upon satisfaction by the Participant of the conditions
precedent to entitlement to a Retirement Pension as they exist under the terms
of the Plan in effect immediately prior to such action, and at the time and on
the terms then in effect.
5.3 Action to Bind Employers. By the execution of the Plan, each
Employer designates the Company as the Employer entitled to administer the Plan
in accordance with Article 6. Subject to Section 5.2, the Company shall have
the further right to amend or terminate the Plan on behalf of each Employer.
The Company shall furnish written notice of such action and a copy of any such
amendment to any other Employer affected thereby, whereupon such amendment or
termination shall become binding upon such Employer.
ARTICLE 6
COMMITTEE
6.1 Establishment of Committee; Authority. The Committee shall
be comprised of one or more members appointed from time to time by the Board
and serving at the pleasure of the Board. The Committee shall make all
determinations required of it by the terms of the Plan, and its constructions
and interpretations of the Plan, as well as its determinations as to
- 11 -
<PAGE>
rights and obligations under the Plan, shall be final and binding upon all
persons; provided, that no member of the Committee shall be entitled to act on
or decide any matter relating specifically to such member (and any such matter
shall be determined by the compensation committee of the Board as if it were
the Committee).
6.2 Powers of Committee. The Committee shall have all powers
necessary or helpful for purposes of administration of the Plan.
6.3 Determinations by Committee. In addition to the specific
responsibilities stated elsewhere in the Plan, the Committee, acting directly
or through its agent, shall be responsible for determination of the Service and
benefits to which any Participant is or may become entitled under the terms of
the Plan.
6.4 Directions to Pay Benefits. All benefit payments under the
Plan shall be upon and in accordance with the written directions of the
Committee or its agent.
6.5 Liability Limited; Indemnification. The members of the
Committee and each of them shall be free from all liability, joint and several,
for their acts and conduct, and for the acts and conduct of any duly
constituted agents. The Employers shall indemnify and save them harmless from
the effects and consequences of their acts and conduct in such official
capacity except to the extent that such effects and consequences flow from
their own willful misconduct. Under no circumstances
- 12 -
<PAGE>
will members of the committee (or any other employee of an Employer) be
personally liable for the payment of Plan benefits.
ARTICLE 7
MISCELLANEOUS
7.1 Payment to Incompetent. If any Participant or Beneficiary
entitled to benefits under this Plan shall be legally incompetent (or shall be
a minor), such benefits may be paid in any one or more of the following ways,
as the Committee in its sole discretion shall determine:
7.1.1 To the Participant's or Beneficiary's legal
representatives;
7.1.2 Directly to such Participant or Beneficiary;
7.1.3 To the spouse or guardian of such Participant or
Beneficiary or to the person with whom such Participant or Beneficiary resides.
Payment to any person in accordance with the foregoing provisions of this
Section 7.1 will, to the extent of the payment, discharge the Employers, and
none of the foregoing nor the Committee will be required to see to the proper
application of any such payment. Without in any manner limiting the provisions
of this Section 7.1, in the event that any amount is payable hereunder to any
legally incompetent Participant or Beneficiary, the Committee may
- 13 -
<PAGE>
in its discretion utilize the procedures described in Section 7.2.
7.2 Doubt as to Right to Payment. If any doubt exists as to the
right of any person to any benefits hereunder or the amount or time of payment
of such benefits (including, without limitation, any case of doubt as to
identity, or any case in which any notice has been received from any other
person claiming any interest in amounts payable hereunder, or any case in which
a claim from other persons may exist by reason of community property or similar
laws), the Committee will be entitled, in its discretion, to direct that
payment of such benefits be deferred until such right or amount or time is
determined or until order of a court of competent jurisdiction, or to pay such
sum into court in accordance with appropriate rules of law in such case then
provided, or to make payment only upon receipt of a bond or similar
indemnification (in such amount and in such form as is satisfactory to the
Committee).
7.3 Withholding. All payments under this Plan shall be subject
to any applicable withholding requirements imposed by any tax or other law.
7.4 Source of Payment. All benefits under this Plan shall be paid
by the Company and/or the Employer of the Participant out of general assets,
and any rights of a Participant or Beneficiary under the Plan shall be mere
unsecured contractual rights. The Company and the Participants intend that any
arrangements made to assist the Company or other Employer to
- 14 -
<PAGE>
meet obligations under this Plan shall be unfunded for tax purposes and for
purposes of Title I of ERISA, and no trust, security, escrow or similar account
shall be established in connection with the Plan. However, the Company and/or
another Employer may in its discretion establish a "rabbi trust" to assist in
meeting the obligation to pay benefits under the Plan, and amounts paid from
any such rabbi trust shall discharge the obligations of the Company and/or
other Employer hereunder to the extent of such payments. No Participant or
Beneficiary shall have a preferred claim on or beneficial ownership interest in
the assets of such rabbi trust.
7.5 Spendthrift Clause. Except as otherwise provided by law, no
benefit, distribution or payment under the Plan may be anticipated, assigned
(either at law or in equity), alienated or subject to attachment, garnishment,
levy, execution or other legal or equitable process.
7.6 Reimbursement of Legal Expenses. In the event that any
dispute shall arise between a Participant and the Company and/or the
Participant's Employer relating to rights under this Plan, and it is determined
by agreement between the parties, or by a final judgment of a court of
competent jurisdiction that is no longer subject to appeal, that the
Participant has been substantially successful in such dispute, reasonable legal
fees and disbursements of the Participant in connection with such dispute shall
be paid by the Company and/or the Participant's Employer.
- 15 -
<PAGE>
7.7 Usage. Whenever applicable, the singular, when used in the
Plan, will include the plural.
7.8 Data. Any Participant or Beneficiary entitled to benefits
under the Plan must furnish to the Committee such documents, evidence or
information as the Committee considers necessary or desirable for the purpose
of administering the Plan, or to protect the Committee; and it is a condition
of the Plan that each such Participant must furnish promptly true and complete
data, evidence or information and sign such documents as the Committee may
require before any benefits become payable under the Plan.
7.9 Separability. If any provision of the Plan is held invalid
or unenforceable, its invalidity or unenforceability will not affect any other
provisions of the Plan, and the Plan will be construed and enforced as if such
provision had not been included therein.
7.10 Captions. The captions contained herein and the table of
contents prefixed hereto are inserted only as a matter of convenience and for
reference and in no way define, limit, enlarge or describe the scope or intent
of the Plan nor shall, in any way, affect the Plan or the construction of any
provision thereof.
7.11 Name. This Plan may be known as the Unfunded Pension Plan
for Selected Executives of Arrow Electronics, Inc.
- 16 -
<PAGE>
7.12 Governing Law. This Plan shall be construed and governed in
all respects according to the laws of the State of New York, where it is
adopted, without regard to principles of conflict of laws, except to the extent
preempted by federal law.
7.13 Right of Discharge Reserved. The establishment of the Plan
shall not be construed to confer upon an employee or Participant any legal
right to be retained in the employ of an Employer or give any employee or any
other person any right to benefits, except to the extent expressly provided for
hereunder. All employees will remain subject to discharge to the same extent
as if the Plan had never been adopted, and may be treated without regard to the
effect such treatment might have upon them under the Plan.
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed by its duly authorized officer and its corporate seal to be hereunto
affixed, this 1st day of March, 1995.
Arrow Electronics, Inc.
By /s/ ROBERT E. KLATELL
---------------------------
Title: Senior Vice President
[corporate seal]
ATTEST:
/s/ WAYNE BRODY
--------------------
- 17 -
CONFORMED COPY
EXHIBIT 10(g)
DATED 20TH DECEMBER 1994
ARROW ELECTRONICS (UK) LIMITED
- and -
NATIONAL WESTMINSTER BANK Plc
----------------------------------------------------------------------------
AMENDMENT AND RESTATEMENT AGREEMENT
RELATING TO A FACILITIES AGREEMENT
DATED 28TH FEBRUARY 1992 AS AMENDED BY
AN AMENDMENT AND RESTATEMENT AGREEMENT DATED 2ND AUGUST 1993
----------------------------------------------------------------------------
<PAGE>
THIS AGREEMENT is made the 20TH day of December 1994
BETWEEN:
(1) ARROW ELECTRONICS (UK) LIMITED registered in England under number
2395760 and whose registered office is at St Martin's Way, Cambridge
Road, Bedford, MK42 OLF (the "Company"); and
(2) NATIONAL WESTMINSTER BANK Plc of 41 Lothbury, London EC2P 2BP acting
through certain of its branches (the "Bank").
WHEREAS:
(A) Pursuant to a facilities agreement dated 28th February 1992 and made
between (1) the Company and (2) the Bank (as amended by an Amendment
and Restatement Agreement dated 2nd August 1993 made between the same
parties) (the "Facilities Agreement"), the Bank has made a term loan
facility and overdraft and ancillary facilities available to the
Company upon the terms and conditions thereof.
(B) The parties hereto have agreed to enter into this Agreement to amend
and vary certain provisions of the Facilities Agreement, and to
restate the Facilities Agreement as so amended and varied.
NOW IT IS HEREBY AGREED as follows:
1. INTERPRETATION
1.1 Definitions
Words and expressions defined in the form of Facilities Agreement set
out in the Schedule hereto shall have the same meanings when used
herein. In addition, the following expressions shall have the
following meanings (except where the context requires otherwise):
"Act" means the Companies Act 1985;
"Certified Copy" means, in relation to any document, a copy of each
document bearing the endorsement "Certified a true, complete and
accurate copy of the original, which has not been amended, altered,
changed or supplemented otherwise than by each document, a certified
copy of which is attached hereto" signed and dated by a duly
authorised officer of the Company or other body in question; and
"Fees Letter" means the letter in the agreed form of even date
herewith from the Bank to the Company being described on its face as
the Fees Letter.
- 1 -
<PAGE>
1.2 Interpretation
Clauses 1.2 and 1.3 of the Facilities Agreement shall be deemed to be
incorporated, mutatis mutandis, herein.
2. AMENDMENT
It is hereby agreed that as and from the date upon which the Bank
gives notice to the Company that the conditions precedent set out in
Clause 3.1 below are satisfied, the Facilities Agreement shall be
amended so as to be in the form set out in the Schedule hereto and
shall take effect in such form.
3. CONDITIONS PRECEDENT
The amendments referred to in Clause 2 above are subject to the
following conditions being satisfied on or prior to 22nd December
1994:
(a) the Bank shall have received all of the following in form and
substance satisfactory to the Bank:
(i) a letter addressed to the Bank and signed by a
director of the Company confirming that the certified
copies of the Memoranda and Articles of Association
and Certificates of Incorporation of each of the
Charging Group Companies as designated in Schedule 5
to the Facilities Agreement which were delivered to
the Bank as a condition precedent to the Facilities
Agreement, (each of which constitutional documents
were certified to be true copies) are, as at 20th
December 1994, true, complete and accurate copies of
the originals, which have not been amended, varied or
supplemented otherwise than by each document, a
certified copy of which is attached thereto;
(ii) Certified Copies of board resolutions of the Company
approving and authorising the execution, delivery and
performance of this Agreement on the terms and
conditions hereof and thereof and authorising a
person or persons to sign or otherwise attest the due
execution of such documents and any other documents
to be executed or delivered pursuant hereto or
thereto together with a certificate of a duly
authorised officer of such company setting out the
names and signatures of the persons authorised to
sign such documents on behalf of such company;
(iii) a certificate of the Company addressed to the Bank
and signed by a director of the Company stating that
the execution by it of this Agreement and the
performance by it of its obligations
- 2 -
<PAGE>
hereunder are within its corporate powers, have been
duly approved by all necessary corporate action and
will not cause any limit or restriction on any of its
powers (whether imposed by law, decree, rule,
regulation, its Memorandum or Articles of
Association, agreement or otherwise) or on the right
or ability of its directors to exercise such powers,
to be exceeded or breached; and
(iv) confirmation from each Charging Group Company that
its Guarantee shall remain in full force and effect;
(b) no Default has occurred and is continuing;
(c) the representations and warranties made pursuant to Clause 5
below are true and accurate in all material respects as at the
date they are made;
(d) evidence in the form of a subscription letter that EDI has
subscribed for ordinary shares in the Company in an aggregate
amount of at least pound sterling 3,150,000; and
(e) the Company shall have paid to the Bank the amendment fee
referred to in paragraph (i) of the Fees Letter.
4. FEES AND EXPENSES
The Company shall pay to the Bank fees and expenses in accordance with
the terms of the Fees Letter. For the avoidance of doubt, all
liabilities and obligations of the Company under the Fees Letter are
hereby deemed to be included under the Facilities Agreement as amended
by this Agreement.
5. EXISTING DRAWINGS
It is hereby agreed that each outstanding Drawing under the
Acquisition Facilities (as defined in the Facilities Agreement prior
to its amendment pursuant hereto) shall as and from the date on which
the Bank gives notice under Clause 2, be deemed to be outstanding
under the Term Loan Facility.
6. UNDERTAKINGS
6.1 The Company undertakes that it shall, during the period up to and
including 30th June 1995, (at its own cost) promptly, upon the Bank's
request, provide the Bank with such assistance as the Bank may
reasonably require in the process of subparticipation of the Term Loan
Facility.
- 3 -
<PAGE>
6.2 The Company undertakes that it shall make the financial earnout
payment due in April 1995 in relation to MMD and pursuant to the
Techdis Acquisition Agreement from external resources.
6.3 The Company undertakes that within 1 month of the date of this
Agreement it will deliver to the Bank a legal mortgage (in form and
substance satisfactory to the Bank) in relation to the Distribution
Centre, duly executed by the Company in favour of the Bank.
7. REPRESENTATIONS AND WARRANTIES
On the date hereof, the Company shall be deemed to represent and
warrant to the Bank in the terms of Clause 12.1 of the form of
Facilities Agreement set out in the Schedule hereto.
8. LIMITATION
Save as expressly amended by this Agreement, the Facilities Agreement
remains in full force and effect.
9. LAW
This Agreement shall be governed by and construed in accordance with
English law.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be duly
executed the day and year first above written.
- 4 -
<PAGE>
SCHEDULE
--------
Dated 28th February 1992
ARROW ELECTRONICS (UK) LIMITED
- and -
NATIONAL WESTMINSTER BANK Plc
-------------------------------
FACILITIES AGREEMENT
-------------------------------
WILDE SAPTE
1 Fleet Place
London EC4M 7WS
Tel. 071 246 7000
Fax. 071 246 7777
Ref : HCD/608807
BF0058352.04
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Clause Title
Pages
------ -----
-----
<S>
<C>
1 INTERPRETATION . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 1
2 FACILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 9
3 PURPOSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 9
4 CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 9
5. AVAILABILITY AND DRAWINGS UNDER THE FACILITIES . . . . . . . . . . .
. . . . . . . . . 10
6. INTEREST AND COMMISSION . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 13
7. REPAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 15
8. PREPAYMENT OF THE TERM LOAN FACILITY . . . . . . . . . . . . . . . .
. . . . . . . . . 16
9. CHANGE IN CIRCUMSTANCES . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 16
10. PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 18
11. SECURITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 20
12. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 20
13. UNDERTAKINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 23
14. FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 29
15. DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 29
16. SET-OFF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 34
17. SEVERABILITY, WAIVERS, REMEDIES CUMULATIVE . . . . . . . . . . . . .
. . . . . . . . . 34
18. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 34
19. ASSIGNMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 36
20. COSTS AND EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 36
21. CURRENCY INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 37
22. PUBLICITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 38
23. LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 38
SCHEDULE 1 DRAWDOWN NOTICE . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 39
SCHEDULE 2 MANDATORY LIQUID ASSET COSTS FORMULA . . . . . . . . . . . . . . .
. . . . . . . . . 40
SCHEDULE 3 DEFINITIONS FOR FINANCIAL COVENANTS . . . . . . . . . . . . . . .
. . . . . . . . . 42
SCHEDULE 4 SECURITY DOCUMENTS . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 45
SCHEDULE 5 THE GROUP . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 46
</TABLE>
<PAGE>
THIS AGREEMENT is made the 28th day of February 1992 BETWEEN:-
(1) ARROW ELECTRONICS (UK) LIMITED registered in England under number
2395760 and whose registered office is at St. Martins Way, Cambridge
Road, Bedford MK42 OLF (the "Company"); and
(2) NATIONAL WESTMINSTER BANK Plc of 41 Lothbury, London EC2P 2BP acting
through certain of its branches ("the Bank").
WHEREAS:-
The Bank has agreed, at the request of the Company, to make the Facilities
available to the Company upon the terms and conditions set forth below.
NOW IT IS HEREBY AGREED as follows:-
1. INTERPRETATION
1.1 In this Agreement (which expression shall include the Schedules
hereto) the following expressions shall have the following meanings
(except where the context otherwise requires) namely:-
"Accounts" means at any particular time the most recent directors'
report and consolidated audited accounts of the Company and its
Subsidiaries delivered to the Bank pursuant to Clause 13.1;
"Acquisition Agreement" means the agreement (in the agreed form) dated
28th February 1992, for the acquisition, inter alia, of the entire
issued share capital of Jermyn and made between, inter alia, (1) Lex
Service PLC (Reg. No. 229121) and (2) the Company together with any
documents and agreements ancillary thereto, whether or not referred to
therein;
"Acquisition Documents" means the Acquisition Agreement and the
Disclosure Letter;
"Arrow" means Arrow Electronics, Inc., a corporation incorporated in
the State of New York, U.S.A.;
"Arrow Inc Indebtedness" means the aggregate obligations and
liabilities (whether present, future, actual and/or contingent) of
Arrow and its subsidiaries (incorporated in the USA) for the payment
or repayment of money incurred in respect of:
(i) monies borrowed or raised;
(ii) any bond, note, loan stock, debenture or similar instrument;
(iii) acceptance credit, bill discounting, note purchase, factoring
facilities or documentary credit facilities; and
(iv) counter-indemnities, guarantees or other assurances against
financial loss in respect of the liability or obligation of
any person falling, within any of (i) to (iii) above;
PROVIDED ALWAYS THAT there shall be no double-counting;
- 1 -
<PAGE>
"Associated Company" has the meaning ascribed thereto by Section 416
of the Income and Corporation Taxes Act 1988 and such expression shall
include "Associated Undertaking" as defined in Section 20 of Schedule
4A to the Companies Act 1985;
"Auditors" means Messrs. Ernst & Young or such other firm of
accountants of similar standing whose appointment as auditors of the
Company shall have been previously approved by the Bank, acting
reasonably;
"Axiom" means Axiom Electronics Limited, a company incorporated in
England and Wales and registered under number 952393;
"Bank Guarantee" means any guarantee, bond, indemnity, letter of
credit, documentary or other credit, or any other instrument of
suretyship or payment issued, undertaken, made or to be made, as the
case may be, by the Bank under the Working Capital Facility;
"Base Rate" means the Bank's published base rate from time to time;
"Business Day" means any day, except Saturdays and Sundays, on which
banks generally are open for business in the City of London of the
type contemplated by this Agreement;
"Capital Expenditure" has the meaning set out in Schedule 3;
"Cash Flow" has the meaning set out in Schedule 3;
"Charging Group" means those Group Companies which are so designated
in Schedule 5 and such additional subsidiaries as the Bank may agree
in writing from time to time can be designated as part of the Charging
Group;
"Charging Group Company" means each company in the Charging Group;
"Commitment Period" means the period from and including the date
hereof to but excluding the Final Repayment Date;
"Completion" means the initial completion of the purchase by the
Company of Jermyn in accordance with the terms of the Acquisition
Agreement;
"Corporation Tax" means corporation tax chargeable in the context of a
scheme of Taxation applied to United Kingdom resident companies
generally at the rate applicable to such companies (disregarding the
provisions of Section 13 of the Income and Corporation Taxes Act 1988
concerning the small companies' rate) or Tax of a similar nature
enacted in addition to or in substitution for corporation tax;
"Debenture" means the debenture, in the Bank's standard form (as
varied from time to time) granted by each Charging Group Company to
the Bank;
"Default" means any of the events specified in Clause 15;
"Deferred Consideration" has the meaning set out in Schedule 3;
"Depreciation" has the meaning set out in Schedule 3;
"Disclosure Letter" means the disclosure letter from the Vendor to,
inter alios, the Company dated 28th February 1992 relating to the
Acquisition Agreement;
- 2 -
<PAGE>
"Distribution Centre Mortgage" means the mortgage in the Bank's
standard form granted, or to be granted, by the Company in favour of
the Bank;
"Distribution Centre Property" means the freehold land and buildings
known as Distribution Centre, Cross Park, Cambridge Road, Bedford and
divided into two sites, Site 1 being registered at H.M. Land Registry
under title number BD 185026 and Site 4 (registration at H.M. Land
Registry pending);
"Drawdown Date" means the date being a Business Day, on which a
Drawing is to be made pursuant to a Drawdown Notice;
"Drawdown Notice" means a notice of drawing substantially in the form
of the notice set out in Schedule 1;
"Drawing" means any and each drawing made under the Term Loan Facility
and thereafter the principal amount of each such Drawing from time to
time outstanding;
"EBIT" has the meaning set out in Schedule 3;
"EDI" means Arrow Electronics Distribution Group Europe BV, a
corporation incorporated in the Netherlands;
"Electronics" means RR Electronics Limited, a company incorporated in
England and Wales and registered under number 282397;
"Eligible Receivables" means any of any debts, monies and liabilities
due and payable to the Company which fulfil the following criteria:-
(i) is a trade debt required to be paid in full within 60 days of
the date upon which the invoice relating thereto is originally
dispatched;
(ii) is not owed by an Associated Company of the Company or any
Subsidiary thereof or by any Group Company or any Subsidiary
thereof save for arms length transactions on normal commercial
terms for the business in question between any Group Company,
Associated Company of the Company or any Subsidiary of any
such company;
(iii) is free and clear of liens and set-offs created by the Company
and discounts (other than discounts in the ordinary course of
trade);
(iv) which is evidenced by invoices;
(v) is not, so far as the Company is then aware, subject to any
dispute, counterclaim or defence;
(vi) is unconditional and not dependent on any performance by the
Company; and
(vii) neither the debtor nor the receivable due from such debtor is
the subject of bona fide legal proceedings with any Group
Company which are not vexatious or frivolous;
"Encumbrance" means any mortgage, charge, assignment by way of
security, pledge, lien, hypothecation or other security interest of
any kind whatsoever;
"Existing, Subordination Deed" means the deed of subordination dated
31st July 1989 executed by, inter alios, the Company, Arrow UK Inc.
and the Bank;
- 3 -
<PAGE>
"Facilities" means the Term Loan Facility and the Working Capital
Facility;
"Facility Documents" means this Agreement and the Security Documents;
"FFE Contracts" means any and all forward foreign exchange contracts
(in the Bank's standard form) entered into, or to be entered into, as
the case may be, by the Company with the Bank under the Working
Capital Facility;
"FFE Facility" means the forward foreign exchange facility referred to
in Clause 5.2.5 under which FFE Contracts may from time to time be
entered into by the Company;
"FFE Nominal Amount" means at any time and in relation to the Company,
the nominal Sterling value (as certified by the Bank) of all FFE
Contracts then outstanding in respect of the Company;
"Final Repayment Date" means in relation to all Drawings, 31st
December 1999;
"Finance Leases" has the meaning set out in Schedule 3;
"Financial Information" means the report addressed to the Bank dated
10th January 1992 together with a supplementary report dated 27th
February 1992 in the agreed form on the Group prepared by Messrs.
Ernst & Young;
"Financial Year" in relation to a company has the meaning ascribed to
such expression by Section 223 of the Companies Act 1985;
"First New Security Documents" means the Techdis Debenture, the
Techdis Guarantee, the MMD Debenture and the MMD Guarantee;
"GAAP" means accounting principles generally accepted in the United
Kingdom consistently applied and consistent with the Reference
Accounts;
"Group" means the Company and Techdis and their respective
Subsidiaries together with all the Subsidiaries of the Company from
time to time during the Security Period;
"Group Company" means each company in the Group;
"Group Dormant Company" means each and any Group Company which is or
becomes, at any time, and remains a dormant company within the meaning
of such expression in accordance with Section 250 of the Companies Act
1985 and to which the Bank agrees in writing to be designated as such
(such agreement not to be unreasonably withheld or delayed);
"Guarantee" means the guarantee in the Bank's standard form (as varied
from time to time) granted by each Charging Group Company to the Bank;
"Indebtedness" has the meaning set out in Schedule 3;
"Instalment" has the meaning set out in Clause 7.1.1;
"Instalment Repayment Date" has the meaning set out in Clause 7.1.1;
"Interest Date" means the last day of each Interest Period;
"Interest Period" means in relation to any Drawing a period of 1, 3 or
6 months or such other period as the Bank may agree and:-
- 4 -
<PAGE>
(a) the first Interest Period shall commence on the relevant
Drawdown Date;
(b) each subsequent Interest Period shall commence on the day
following the last day of the immediately preceding Interest
Period;
(c) an Interest Period which would otherwise end on a day which is
not a Business Day shall be extended to the next Business Day
unless that next Business Day falls in the next calendar month
when the Interest Period shall end on the immediately
preceding Business Day;
(d) if any Interest Period commences on the last Business Day in a
month or if there is no corresponding day in the month in
which it is to end then it shall end on the last Business Day
in such month;
(e) if an Interest Period is extended or shortened by the
application of the foregoing, the following Interest Period
shall (without prejudice to the application of the foregoing)
end on the day on which it would have ended if the preceding
Interest Period had not been so extended or shortened; and
(f) any amount to be repaid under Clause 7 shall have a final
Interest Period expiring on the relevant Instalment Repayment
Date or Final Repayment Date, as the case may be;
"Interest Rate Protection Contracts" means all and each of the
interest rate protection contracts entered into by the Company and the
Bank;
"Jermyn" means Jermyn Holdings Limited, a company incorporated in
England and Wales and registered under number 1369015;
"LIBOR" means the percentage rate per annum (rounded up, if necessary
to the nearest 1/16th of one per cent) at which the Bank offers
Sterling deposits in an amount comparable to the relevant Drawing for
a period equal to such Interest Period to prime banks in the London
inter-bank market at or about 11.00 a.m. (London time) on the first
day of such Interest Period;
"Management Accounts" means the management accounts to be provided by
the Company to the Bank pursuant to Clause 13.1 (c);
"Mandatory Liquid Asset Costs" means the additional cost to the Bank
of compliance with the relative reserve asset ratio required by the
Bank of England from time to time, expressed as a rate per cent per
annum calculated on the basis of the application of the formula set
out in Schedule 2;
"Margin" means three quarters of one per cent (0.75%) per annum;
"MMD" means Microprocessor and Memory Distribution Limited, a company
incorporated in England and Wales and registered under number 1920668;
"MMD Debenture" means the mortgage debenture dated 17th August 1993
granted, by MMD in favour of the Bank;
"MMD Guarantee" means the unlimited composite cross-guarantee dated
17th August 1993 granted by MMD in favour of the Bank;
"Net Working Capital" has the meaning set out in Schedule 3;
- 5 -
<PAGE>
"Overdraft Facility Limit" means pound sterling 7,000,000;
"Permitted Encumbrance" means any Encumbrance:-
(i) being a lien arising by operation of law as a result of
transactions undertaken bona fide in the ordinary course of
business;
(ii) being a lien over goods and documents of title thereto arising
in the ordinary course of letter of credit transactions;
(iii) arising by way of retention of title to goods by the supplier
of those goods where such retention of title is permitted by
the Company;
(iv) over or affecting any asset acquired by a Group Company after
the date hereof and subject to which such asset is acquired,
provided that:-
(a) such Encumbrance was not created at the request of
that Group Company in contemplation of the
acquisition of such asset by that Group Company;
(b) the amount, actual or contingent, thereby secured has
not been increased in contemplation of, or since the
date of, the acquisition of such asset by that Group
Company; and
(c) such Encumbrance shall be discharged within 12 months
of such acquisition and except where the amount,
actual or contingent, thereby secured does not exceed
pound sterling 300,000 until such discharge the
person or persons in whose favour the Encumbrance has
been created shall enter into such form of
subordination and priority agreement as the Bank
shall require;
(v) over, or affecting any assets of any company which becomes a
Charging Group Company after the date hereof, where such
Encumbrance is created prior to the date on which such company
becomes a Group Company, provided that:-
(a) such Encumbrance was not created at the request of
any Group Company in contemplation of such company
becoming a Group Company and such company was not
acquired with the assistance of the Working Capital
Facility;
(b) the amount thereby secured, actual or contingent, has
not been increased at the request of such company, or
any Group Company in contemplation of, or since the
date of such company becoming a Group Company; and
(c) such Encumbrance shall be discharged within 12 months
of such acquisition and except where the amount,
actual or contingent, thereby secured does not exceed
pound sterling 300,000 until such discharge the
person or persons in whose favour the Encumbrance has
been created shall enter into such form of
subordination and priority agreement as the Bank
shall require;
(vi) being a lien arising by operation of law in the ordinary
course of trading where the amount payable in respect of the
lien is either not yet due for payment or is being contested
in good faith;
(vii) which comprises the Existing Security;
- 6 -
<PAGE>
(viii) which comprises security created pursuant to a Security
Document hereunder;
"Potential Default" means an event which with the giving of notice
and/or lapse of time and/or the satisfaction of any other condition
would be a Default;
"Qualifying Bank" means an institution which is, for the time being,
recognised by the United Kingdom Inland Revenue as carrying on through
its lending office situated in the United Kingdom for the purposes
hereof a bona fide banking business in the United Kingdom for the
purposes of Section 349(3) of the Income and Corporation Taxes Act
1988 and which makes loans from such lending office situated in the
United Kingdom;
"Reference Accounts" means the audited consolidated accounts of Jermyn
and its Subsidiaries for the period ended 29th December 1991 which
comprise the English element of the Completion Balance Sheets (as
defined in the Acquisition Agreement) and of the Company and its
Subsidiaries for the period ended 31st December 1991;
"Security Documents" means the documents listed in Schedule 4, the
First New Security Documents, the Distribution Centre Mortgage and any
other documents entered into at any time by way of security for the
obligations of the Company hereunder;
"Security Period" means the period starting from the date of this
Agreement and ending on the date when all monies and liabilities
(whether present, future, actual or contingent) owing under any of the
Facility Documents have been paid or, as the case may be, discharged
in full and the Bank has no further obligations hereunder or
thereunder;
"Shares Charge" means a charge dated 20th March 1992 in favour of the
Bank given by EDI over the entire issued share capital of the Company
as security for the obligations of the Company hereunder;
"Sterling" "Pounds" and "pound sterling" means the lawful currency for
the time being of the United Kingdom;
"Sterling, Equivalent" means, in relation to an amount in US Dollars
on the day on which the calculation falls to be made, the amount of
Sterling which could be purchased with such amount of US Dollars on
the basis of the Bank's spot buying rate for Sterling against US
Dollars at or about 11.00 a.m. on the second Business Day immediately
prior to that date;
"Subsidiary" has the meaning ascribed to it by Section 736 of the
Companies Act 1985;
"Tangible Net Worth" has the meaning set out in Schedule 3;
"Tax" includes all present and future taxes, charges, imposts, duties,
levies, deductions, withholdings or fees of any kind whatsoever
payable at the instance of or imposed by any statutory, governmental,
international, state, federal, provincial, local or municipal
authority, agency, body or department whatsoever or any central bank
or monetary agency, in each case whether in the United Kingdom or
elsewhere, together with any penalties, additions, fines, surcharges
or interest relating thereto and "Taxes" and "Taxation" shall be
construed accordingly;
"Techdis" means Techdis Limited, a company incorporated in England and
Wales and registered under number 2058603;
- 7 -
<PAGE>
"Techdis Acquisition Agreement" means the agreement dated 2nd July
1993 for the acquisition, inter alia, of the entire issued share
capital of Techdis and made between, inter alios, (1) the persons
whose names and addresses are set out therein and (2) the Company
together with any documents and agreements ancillary thereto, whether
or not referred to therein;
"Techdis Debenture" means the mortgage debenture dated 17th August
1993 granted by Techdis in favour of the Bank;
"Techdis Guarantee" means the unlimited composite cross-guarantee
dated 17th August 1993 granted by Techdis in favour of the Bank;
"Techdis Shares" means the shares in Techdis acquired by the Company
pursuant to the Techdis Acquisition Agreement;
"Term Loan" means the aggregate of all Drawings;
"Term Loan Facility" means the term loan facility referred to in
Clause 2(i);
"Term Loan Facility Limit" means, subject to Clause 5.1.6, pound
sterling 15,000,000;
"Total Debt" has the meaning set out in Schedule 3;
"Total Financing Costs" has the meaning set out in Schedule 3;
"Total Interest Costs" has the meaning set out in Schedule 3;
"US Dollars", "US$", or "$" means the lawful currency for the time
being of the U.S.A.;
"U.S.A." means the United States of America;
"VAT" means value added tax as provided for in the Value Added Tax Act
1983 (and legislation, whether delegated or otherwise) supplemental
thereto and any similar or turnover Tax replacing or introduced in
addition to any of the same;
"Working Capital Available Amount" means, subject to the terms of
this Agreement, that amount which at any time represents the Working
Capital Facility Limit less the Working Capital Facility Liabilities;
"Working Capital Facility" means the facilities to be made available
by the Bank hereunder, subject to the Working Capital Facility Limit,
the terms and conditions of which are set out in this Agreement;
"Working Capital Facility Liabilities" means, at any time, the
aggregate of (i) 20 per cent or such other percentage amount as the
Bank acting reasonably may determine of the FFE Nominal Amount of all
FFE Contracts issued under the Working Capital Facility (the "FFE
Contract Amount"), and (ii) the sum of all other liabilities whether
actual or contingent of the Company to the Bank under the Working
Capital Facility from time to time (excluding interest accruing but
not yet due), in each case as certified by the Bank, such
certificate, in the absence of manifest error, to be binding on the
Company. (For these purposes all US Dollar amounts shall be computed
on the basis of their Sterling Equivalent); and
"Working Capital Facility Limit" means pound sterling 9,000,000.
- 8 -
<PAGE>
1.2 Clause headings and the table of contents are inserted for convenience
of reference only and shall not affect the construction of this
Agreement.
1.3 In this Agreement, unless the context otherwise requires:-
(a) references to Clauses and Schedules are to be construed as
references to the Clauses of and Schedules to this Agreement
as amended from time to time and references to Clauses shall,
unless otherwise specifically stated, be construed as
references to the Clauses in the Clause in which the reference
appears and references to this Agreement include its Schedules
as amended from time to time;
(b) references to (or to any specified provisions of) this
Agreement or any other document shall be construed as
references to this Agreement, that provision or that document
as in force for the time being and as amended from time to
time;
(c) references to any statute, order or regulation shall be
construed as references to such statute, order or regulation
as amended, re-enacted or consolidated from time to time;
(d) references to any person shall be construed as references to
that person or that person's assigns or successors in title,
in whole or in part;
(e) references to a document in the agreed form are to the form of
the relevant document initialled by Wilde Sapte on behalf of
the Bank and Herbert Smith on behalf of the Company; and
(f) references to the singular include the plural and vice versa.
2. FACILITIES
Upon and subject to the terms and conditions of this Agreement, the
Bank agrees to make available to the Company:-
(i) the Term Loan Facility in a maximum principal amount of up to
the Term Loan Facility Limit; and
(ii) the Working Capital Facility in an aggregate maximum principal
amount of up to the Working Capital Facility Limit as more
particularly described in Clause 5.2.
3. PURPOSE
3.1 The purpose of the Term Loan Facility is to assist the Company to:-
(i) finance certain acquisitions including the Distribution Centre
Property and;
(ii) finance the Company's general corporate purposes.
3.2 The purpose of the Working Capital Facility is to assist the Company's
general working capital requirements.
- 9 -
<PAGE>
4. CONDITIONS PRECEDENT
All conditions precedent have been satisfied.
5. AVAILABILITY AND DRAWINGS UNDER THE FACILITIES
5.1 Availability and Drawings under the Term Loan Facility
5.1.1 Subject to the other terms hereof, the Company may make up to two (2)
Drawings.
5.1.2 As at 20th December 1994 the following Drawing was outstanding under
the Term Loan Facility:
a Drawing of an amount of pound sterling 7,400,000 with the next
Interest Date on 30th December 1994.
5.1.3 The Company shall give the Bank notice of its intention to borrow a
further Drawing in the form of a Drawdown Notice.
5.1.4 Once given, a Drawdown Notice shall be irrevocable and shall oblige
the Company to borrow in accordance with its terms.
5.1.5 A Drawdown Notice shall be delivered to the Bank not later than 10:00
a.m. (London time) one Business Day before the proposed Drawdown Date
(or within such shorter period as the Bank may allow).
5.1.6 Any part of the Term Loan Facility undrawn at the close of business on
the 30th April 1995 shall be cancelled and shall not be available for
borrowing by the Company.
5.1.7 If the Drawing is not made in full on the relative Drawdown Date the
Company will on demand pay to the Bank such amount as the Bank may
certify (by a certificate prepared, and having the same effect, as
described in Clause 8.3) as necessary to compensate it for any losses
or costs on account of funds borrowed or contracted for in order to
fund such Drawing.
5.1.8 Notwithstanding any other provisions of this Agreement, no Drawdown
Notice may be served and no further Drawing may be made:-
(a) if a Default or Potential Default has occurred and is
continuing unremedied and/or unwaived or if a Default would
occur on such Drawing being made; or
(b) unless the representations and warranties set out in Clause 12
are, or will be, true and accurate on the date on which the
relative Drawdown Notice is served and on the relative
Drawdown Date.
5.2 Availability and Drawings under the Working Capital Facility
5.2.1 Utilisation
Subject to the other terms of this Agreement, the Bank hereby agrees
to make the Working Capital Facility available to the Company during
the Commitment Period on a revolving basis to be utilised on any
Business Day by way of:-
(i) overdraft in accordance with Clause 5.2.2;
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<PAGE>
(ii) the issue of Bank Guarantees in accordance with Clause 5.2.3;
(iii) the entering into of FFE Contracts, subject to the
availability of the relevant currencies, in accordance with
Clause 5.2.5; and
(iv) such other banking facilities as the Bank and the Company may
agree;
PROVIDED THAT at no time shall the Working Capital Facility
Liabilities exceed the Working Capital Facility Limit and PROVIDED
FURTHER THAT the Working Capital Facility Liabilities shall not at any
time exceed that amount which represents the aggregate of fifty (50)
per cent of Eligible Receivables.
5.2.2 Overdraft Facility
The Company may utilise the Working Capital Facility by way of
borrowing on overdraft subject to the Overdraft Facility Limit.
Overdrafts may be denominated in Sterling or US Dollars and will be
provided on the Company's Sterling or Dollar accounts respectively
held with the Bank. Notwithstanding the provisions of Clause 15 all
amounts advanced to the Company by way of overdraft shall be repayable
on demand and subject to the Bank's usual terms and conditions for
such facilities. Any such overdraft will be made available on the
basis that, subject to renegotiation, it shall only be available for
the ensuing 12 month period the first such period commencing on the
date hereof PROVIDED THAT at no time shall the Bank be obliged to make
advances by way of overdraft under the Working Capital Facility or
make other banking facilities available if the making of any of the
same would result in the Working Capital Facility Liabilities
exceeding the Working Capital Facility Limit.
5.2.3 Bank Guarantees
5.2.3.1 The Bank shall not be obliged to issue any Bank Guarantee under the
Working Capital Facility unless the Bank has received a request from
the Company for the Bank to issue a Bank Guarantee:-
(i) in respect of letters of credit or bills of exchange, at least
5 Business Days (or such other period as agreed between the
Bank and the Company) prior to the proposed issue; and
(ii) in respect of any other instrument at least 10 Business Days
prior to the proposed issue
and subject to:-
(a) the Bank approving the form and purpose of the proposed Bank
Guarantee including the maximum liability and maturity
thereof;
(c) no Default or Potential Default having occurred and continuing
unremedied and unwaived or occurring as a result of the issue
of the Bank Guarantee; and
(d) the representations and warranties set out in Clause 12 being
true and accurate on the date on which the request is served
and on the date of issue of the Bank Guarantee subject to any
matter, fact or circumstance disclosed pursuant to Clause
12.3;
then the Bank shall issue a Bank Guarantee unless the issue of such
Bank Guarantee would result in the maximum liability thereunder
leading to a breach of the Working
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<PAGE>
Capital Facility Limit when aggregated with the other outstanding
Working Capital Facility Liabilities.
5.2.3.2 No Bank Guarantee will be issued under which a claim could be made on
the Bank on or after the Final Repayment Date.
5.2.4 Counter-Indemnity
5.2.4.1 In consideration of the Bank making available the Working Capital
Facility, the Company hereby unconditionally and irrevocably agrees
and undertakes to the Bank as follows:-
(a) it will at all times indemnify the Bank and keep the Bank
indemnified from and against all actions, suits, proceedings,
claims, demands, liabilities, damages, costs, expenses, losses
and charges whatsoever in relation to each Bank Guarantee
issued for its account and it will pay to the Bank on demand
the amount of all payments made (whether directly or by way of
set-off, counterclaim or otherwise howsoever) and all losses,
costs and expenses suffered or incurred from time to time by
the Bank under or by reason or in consequence of any Bank
Guarantee and any of the aforesaid indemnities relating
thereto;
(b) it hereby irrevocably authorises the Bank to comply with the
terms of any demand served or purporting to be served on the
Bank pursuant to a Bank Guarantee issued for its account
without any reference to or further authority from it and
without any enquiry by the Bank into the justification for
such demand or the validity thereof and hereby agrees that any
payment which the Bank shall make in accordance with such
demand or purported demand shall be binding on and be accepted
by the Company as conclusive and binding evidence that the
Bank was liable to comply with the terms of such demand and
was liable to do so in the manner and for the amount in which
the Bank effected such compliance;
(c) the liability of the Company under this indemnity shall not be
discharged, lessened or impaired by any time being given or by
any thing being done or other circumstance whatsoever which,
but for this provision, would or might operate to exonerate or
discharge it; and
(d) the Company hereby agrees that the indemnity contained in this
Clause shall constitute and be a continuing security to the
Bank and that the said indemnity shall extend to each Bank
Guarantee as it may, from time to time, be varied, modified,
amended or extended.
5.2.4.2 The Company hereby agrees that it shall pay to the Bank interest (at
the rate then applicable to advances made by way of overdraft pursuant
to Clause 5.2.2) on the amount of each payment, loss, cost and expense
made, suffered or incurred from time to time by the Bank under or by
reason or in consequence of any Bank Guarantee in respect of the
Company and any of the aforesaid indemnities relating thereto from and
including the date upon which such payment, loss, cost or expense is
made, suffered or incurred as aforesaid up to and including the date
upon which payment or reimbursement of such amount is demanded from
the Company.
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<PAGE>
5.2.5 FFE Contracts
The Bank shall not be obliged to enter into any FFE Contract with a
maturity of longer than 12 months or which would or may result in the
Bank incurring a loss or being under any liability or obligation
(actual or contingent) after the Final Repayment Date. Any
utilisation of the FFE Facility is subject to a maximum aggregate net
limit of pound sterling 2,000,000 calculated by reference to the FFE
Contract Amount.
5.2.6 Secured Debt
For the avoidance of doubt it is hereby agreed that the obligations
and liabilities of the Company to the Bank under the Working Capital
Facility from time to time are secured pursuant to the terms of the
Security Documents.
5.2.7 Bank's Certificate Conclusive
The Bank's certificate as to the amount of the Working Capital
Facility Liabilities at any given time and any other figure under this
Clause 5 shall, in the absence of manifest error, be conclusive and
binding on the Company.
6. INTEREST AND COMMISSION
6.1 Rates
6.1.1 The Company may by notice substantially in the form of a Drawdown
Notice (but with references to the Drawing and the payment
instructions omitted) received by the Bank not later than 10.00 a.m.
(London time) on the third Business Day preceding the first day of
each next succeeding Interest Period select the duration of such
Interest Period for each Drawing. Each Interest Period in respect of
each Drawing shall be for a period of 3 months' duration unless the
Company shall have otherwise notified the Bank PROVIDED THAT if the
Term Loan is already outstanding, any subsequent Drawing shall have a
first Interest Period that expires on the same day as the Interest
Period then applicable to the Term Loan.
6.1.2 The Company shall pay interest on each Drawing to the Bank from the
Drawdown Date to the date on which that Drawing is repaid in full
(after as well as before judgment) and such interest shall be
calculated in respect of successive Interest Periods. Without
prejudice to the provisions of Clauses 6.2, 10.3, 10.4.1, 10.4.2 and
10.4.3, the rate of interest applicable to each Drawing for any
Interest Period (or part thereof) shall be the rate per annum
determined by the Bank to be the aggregate of:-
(i) the Margin;
(ii) LIBOR; and
(iii) Mandatory Liquid Asset Costs.
6.1.3 Interest on all amounts outstanding by way of overdraft under the
Working Capital Facility shall accrue from day to day at the rate per
annum which is the greater of (a) six and a half per cent (6.5%) per
annum; and (b) the relevant Base Rate of the Bank for the time being
and from time to time plus the Margin. In the case of a US Dollar
overdraft all interest payable thereon shall be made in US Dollars.
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<PAGE>
6.1.4 (a) The Company shall pay commission on the maximum amount of the
aggregate of the Bank's actual and contingent liability under
each Bank Guarantee which constitutes a bond, guarantee or
similar commitment at the rate of 2 per cent per annum which
shall be paid quarterly in advance.
(b) The Company shall pay fees to the Bank in respect of FFE
Contracts and Bank Guarantees constituting documentary credits
or other similar engagements in such amount as may be agreed
between the Bank and the Company from time to time in
accordance with the Bank's usual scale of charges.
6.2 Market Disruption
If the Bank shall determine that, by reason of circumstances affecting
the London inter-bank market generally, reasonable and adequate means
do not exist for determining under Clause 6.1.2 the rate of interest
applicable to the Drawings:-
(i) the Bank shall promptly notify the Company in writing of such
event;
(ii) the Bank and the Company shall discuss an alternative basis
for making and continuing the Drawings during subsequent
Interest Periods (either for an alternative period or periods
or by obtaining Sterling funds in another market or markets)
or as the case may be for calculating the rate of interest
applicable to the Drawings, in either case on the basis that
the net return to the Bank shall be the same as it would have
been had such circumstances not occurred;
(iii) subject to paragraph (iv) below, unless the Bank and the
Company shall have agreed upon such alternative basis within
thirty (30) days of the date of service of the notice referred
to in Clause 6.2(i) the Company shall pay interest from the
relevant Interest Date at a rate equal to the Margin plus such
amount as is certified by the Bank as being the cost to the
Bank of continuing to make the Drawings available, which
certificate shall, save for manifest error, be conclusive
evidence of such interest and, so long as there shall continue
to be no agreement upon such alternative basis, the Company
shall be entitled to prepay part or all of the Drawings on the
last day of an Interest Period upon 30 days' written notice
from the Company to the Bank;
(iv) if within 30 days of the date of service of the notice
referred to in Clause 6.2(i) the Bank and the Company shall
agree upon such an alternative basis, then such basis shall be
effective in respect of the Drawings from (and, if applicable,
retroactive to) the beginning of the Interest Period in
respect of the Term Loan beginning on or after the date of
service of such notice by the Bank to the expiry of the first
Interest Period which expires after such circumstances no
longer exist.
6.3 Default Interest
6.3.1 If the Company does not pay any sum due and payable under any of the
Facilities on the due date the Company shall pay interest on such sum
(or, as the case may be, the amount thereof for the time being due and
unpaid) from such date to the date of actual payment in full (after as
well as before judgment), calculated by reference to successive
interest periods (each of such duration as the Bank may from time to
time select and the first beginning on such due date) ("default
interest periods") at the percentage rate per annum determined by the
Bank to be the aggregate of:-
(i) 2 per cent per annum;
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<PAGE>
(ii) the Margin;
(iii) LIBOR; and
(iv) Mandatory Liquid Asset Costs.
6.3.2 So long as the default continues, such rate shall be recalculated in
accordance with the provisions of this Clause at the end of each such
default interest period (the amount of unpaid interest accrued during
such preceding default interest period in respect of such sum being
added to the sum in default and bearing interest accordingly).
6.3.3 If the Company does not pay any sum due and payable under the Working
Capital Facility, it shall pay interest on such sum (or, as the case
may be, the amount thereof for the time being due and unpaid) from
such date to the date of actual payment in full (after as well as
before judgment), at a rate equal to 2 per cent. above the rates
referred to in Clauses 6.1.3 and 6.1.4 as the case may be.
6.4 The Bank's Determination
The determination by the Bank of any interest payable for any period
or part thereof shall, save for manifest error, be conclusive. The
Bank will notify the Company of the rate of interest payable for any
default interest period, Interest Period or part thereof (and, in the
case of additional interest payable under Clause 6.3, of the amount of
such additional interest).
6.5 Calculation and Payment of Interest
Interest on all Drawings or, as the case may require, other amounts
due from the Company under this Agreement, at the rates determined as
aforesaid shall:-
(a) accrue from day to day;
(b) be calculated on the basis of the actual number of days
elapsed, and (i) a 365 day year or (ii) in respect of a sum
due in US Dollars a 360 day year; and
(c) except as otherwise provided in this Agreement be paid by the
Company in arrear on each Interest Date and, if an Interest
Period exceeds 6 months, every 6 months in arrear.
7. REPAYMENT
7.1 The Term Loan Facility
7.1.1 Subject to the terms of this Agreement, the Company shall until the
Term Loan is repaid in full repay the Term Loan by payment to the Bank
on the dates set out in Column A below (each date being an "Instalment
Repayment Date") of the Sterling amount (together with any amount
payable on such Instalment Repayment Date pursuant to Clause 7.1.2, an
"Instalment") set out in Column B below opposite the relevant
Instalment Repayment Date.
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<PAGE>
<TABLE>
<CAPTION>
Column A Column B
-------- --------
pounds sterling
<S> <C>
30 June 1995 300,000
31 December 1995 300,000
30 June 1996 1,400,000
31 December 1996 1,400,000
30 June 1997 1,900,000
31 December 1997 1,900,000
30 June 1998 1,900,000
31 December 1998 1,900,000
30 June 1999 2,000,000
31 December 1999 (the "Final Repayment Date") 2,000,000
</TABLE>
7.1.2 Any amounts repaid or prepaid may not be reborrowed.
7.2 The Working Capital Facility
7.2.1 Subject to the other terms hereof, all amounts due under the Working
Capital Facility shall be repaid on or before the Final Repayment Date
whether outstanding by way of overdraft pursuant to Clause 5.2.2 or
otherwise and including all payments, if any, to be made of cash
collateral equal to the Bank's maximum liability (actual or
contingent) in respect of the Bank Guarantees and the FFE Contracts.
7.2.2 Any part of the Working Capital Facility not utilised as at the close
of business on the last day of the Commitment Period shall be
automatically cancelled at that time.
8. PREPAYMENT OF THE TERM LOAN FACILITY
8.1 The Company may prepay all or any part of the Term Loan (the amount of
any partial prepayment being, an integral multiple of pound sterling
100,000) on an Interest Date provided that the Bank shall have
received not less than 10 days' prior irrevocable written notice of
the Company's intention to make such prepayment specifying the amount
to be prepaid. Notice of intended prepayment having been given, it
shall be obligatory for the prepayment to be made in accordance with
the notice. No amount prepaid may be re-drawn.
8.2 Any amount of the Term Loan prepaid pursuant to this Clause shall be
applied in and towards the discharge of the Instalments outstanding at
the date of such prepayment such that the amount prepaid shall be
applied first, consecutively in respect of the next two Instalments
falling after each prepayment date and second, pro rata to the
remaining Instalments PROVIDED THAT if pursuant to this Clause a
prepayment is applied, consecutively, against the next two Instalments
in full, a repayment must be made in respect of the next Instalment on
the relevant Instalment Repayment Date specified in Clause 7.1.1,
before prepayments may be applied to the then immediately succeeding
two Instalments.
8.3 If any repayment or prepayment is made otherwise than on an Interest
Date relative to the amount paid, the Company shall pay to the Bank on
demand such additional amount as the Bank may certify as necessary to
compensate the Bank for any loss or expense on account of funds
borrowed, contracted for or utilised to fund the amounts so repaid or
prepaid beyond the above date. Any certificate issued by the Bank
pursuant to this Clause (or under Clause 5.1.7) shall state the amount
and show the calculation of any such loss or expense after giving
credit for any incidental saving effected by the Bank in mitigation
thereof, and shall be conclusive save in the case of manifest error.
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<PAGE>
8.4 The Company may not prepay all or any part of the Term Loan except in
accordance with the express terms of this Agreement.
9. CHANGE IN CIRCUMSTANCES
9.1 If the introduction of, or any change in, any applicable law, statute,
rule or regulation or any change in the interpretation thereof by any
regulatory or other authority charged with the administration thereof
or by any court shall make it unlawful for the Bank to advance or
leave outstanding the Term Loan or otherwise to maintain or give
effect to its obligations under this Agreement the Bank shall notify
the Company of such illegality and the Bank's obligations under this
Agreement shall be forthwith cancelled and the Company shall, within
such period (if any) as may be allowed by law or forthwith if no such
period is allowed, prepay to the Bank the Term Loan. Any such
prepayment shall be subject to Clause 8.3. Without prejudice to the
Bank's rights under this Clause 9.1 the Bank will use reasonable
endeavours to mitigate the effect of such illegality and in particular
(without prejudice to the generality of the foregoing) shall consider
in consultation with the Company continuing the Term Loan through
another office or transferring the Facilities to one or more of its
affiliates or other financial institutions.
9.2 If the introduction, abolition, withdrawal of, or any change in:-
(a) any applicable law, regulation, practice or concession; or
(b) any official directive or regulatory requirement or request
(whether or not having the force of law) of the Bank of
England, the European Community, or of any other governmental,
monetary or other authority (whether in the United Kingdom or
elsewhere)
or any change in the interpretation (or introduction of any
interpretation) or application thereof shall:-
(i) subject the Bank to any Tax, or increase the amount of any
Tax in connection with it having agreed to make available and
maintaining the Term Loan or any part thereof or in connection
with this Agreement or any of the Security Documents or any
document or transaction contemplated herein or therein or any
part thereof other than Corporation Tax on the Bank's overall
net income; or
(ii) change the basis of Taxation of the Bank in respect of
payments of principal, interest or any other payment due or to
become due in connection with the Facilities or any part
thereof or in connection with this Agreement or any of the
Security Documents or any document or transaction contemplated
herein or therein or any part thereof (or the treatment for
Taxation purposes of such payments); or
(iii) change the basis on which the Bank is treated for Taxation
purposes in respect of any principal, interest or other
amounts paid by the Bank on, or otherwise in respect of,
deposits from third parties used to effect or maintain the
Term Loan or any part thereof or in connection with this
Agreement or any of the Security Documents or any document or
transaction contemplated herein or therein; or
(iv) impose, modify or deem applicable any reserve, cash ratio,
special deposit, capital adequacy, and/or liquidity
requirement or any other analogous requirement, or require the
making of any special deposits, against or in respect of any
assets or liabilities of, deposits with or for the
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<PAGE>
account of, or loans by, the Bank for which the Bank is not
entitled to be fully compensated under Clause 6.1.2; or
(v) change the manner in which the Bank allocates capital
resources to its obligations under the Facilities so that it
is unable to obtain the rate of return on its overall capital
which it would have been able to obtain but for its entering
into and/or performing its obligations and/or assuming or
maintaining its commitment under this Agreement; or
(vi) impose on the Bank any other condition directly affecting its
participation in the Facilities;
and the result of any of the foregoing is either to increase the cost
to the Bank of making available or maintaining the Term Loan or any
part thereof or to reduce the amount of any payment received or
receivable by the Bank or to reduce its return from the Facilities,
then and in any such case:-
(w) the Bank shall promptly notify the Company;
(x) subject to the Bank taking the steps referred to in (y) below,
the Company shall pay from time to time to the Bank on demand
all amounts which the Bank certifies (in a certificate which
shall set out in reasonable detail so far as is practicable
the basis of the computation of such amounts) is necessary to
compensate the Bank for the additional cost or reduction;
(y) without prejudice to the foregoing, the Bank confirms that, if
it notifies the Company as aforesaid, it will take such steps
as it considers reasonable to reduce or avoid the additional
cost or reduction and, if the Company so requests, the Bank
shall consult the Company with a view to finding a means of
reducing or avoiding the additional cost or reduction and, in
particular, shall consider continuing the Term Loan through
another office or, upon the written request of the Company,
shall use all reasonable endeavours to assign the whole of its
rights and obligations under this Agreement to another
financial institution acceptable to the Company PROVIDED THAT
the Bank shall not be obliged to continue such negotiations
for a period of longer than 30 days; and
(z) the Company, at any time after receipt of such notification as
is referred to in (w) above, so long as the circumstances
giving rise to such additional cost, or, as the case may be,
reduction continue, shall be entitled on giving not less than
10 days' notice to the Bank (which shall be irrevocable) to
prepay the Term Loan or any part thereof. Any such prepayment
shall be subject to the provisions of Clause 8.
9.3 The certificate or notification of the Bank as to any of the matters
referred to in Clauses 9.1 and 9.2 above shall, save for any manifest
error, be conclusive and binding on the Company.
10. PAYMENTS
10.1 All payments to be made by the Company under this Agreement shall be
made in immediately available funds during normal banking hours on the
day in question to the Bank not later than 12.00 noon (London time) on
such day.
10.2 If, but for this Clause, any sum would become due for payment under
this Agreement on a day which is not a Business Day, such payment
shall be made on the next succeeding Business Day unless that next
Business Day falls in the next
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<PAGE>
calendar month when payment shall be made on the immediately preceding
Business Day and interest shall be adjusted accordingly.
10.3 The Company shall indemnify the Bank on demand against any loss or
expense (including, but not limited to any loss of the Margin or any
other loss or expense sustained or incurred or to be sustained or
incurred by the Bank in liquidating or employing deposits required or
contracted for to effect or maintain the Term Loan or any part
thereof) which the Bank may sustain or incur as a consequence of (i) a
default by the Company in the payment on the due date of any sum due
under this Agreement or (ii) the repayment of the Term Loan pursuant
to Clause 15.
10.4.1 All sums payable to the Bank pursuant to or in connection with this
Agreement and the Security Documents, or any document contemplated by
or entered into pursuant hereto or thereto, shall be paid in full
without any set-off or counterclaim whatsoever and free and clear of
all deductions or withholdings whatsoever save only as may be required
by law.
10.4.2 If any deduction or withholding is required by law in respect of any
payment due to the Bank pursuant to or in connection with this
Agreement and the Security Documents, or any document contemplated by
or entered into pursuant hereto or thereto, the Company shall:-
(a) ensure or procure that the deduction or withholding is made
and that it does not exceed the minimum legal requirement
therefor,
(b) pay, or procure the payment of, the full amount deducted or
withheld to the relevant Taxation or other authority in
accordance with the applicable law;
(c) (i) if the payment is to be made by the Company, increase
the payment in respect of which the deduction or
withholding is required so that the net amount
received by the Bank after the deduction or
withholding (and after taking account of any Tax
liability which arises as a consequence of the
increase) shall be equal to the amount which the Bank
would have been entitled to receive in the absence of
any requirement to make a deduction or withholding;
or
(ii) if the payment Is to be made by any person other than
the Company, pay directly to the Bank such sum (a
"compensating sum") as will, after taking into
account any Tax liability of the Bank in respect of
the compensating sum, enable the Bank to receive, on
the due date for payment, a net sum equal to the sum
which the Bank would have received in the absence of
any obligation to make a deduction or withholding;
and
(d) within 30 days of receipt deliver to the Bank appropriate
receipts evidencing the deduction or withholding which has
been made or procure the delivery of such receipts.
10.4.3 If the Bank determines, in its absolute discretion, that it has
received, realised, utilised and retained a Tax benefit by reason of
any deduction or withholding in respect of which the Company has made
an increased payment or paid a compensating sum under this Clause
10.4, the Bank shall, provided it has received all amounts which are
then due and payable by the Company and any other person under any of
the provisions of this Agreement and the Security Documents, pay to
the Company (to the extent that the Bank can do so without prejudicing
the amount of such benefit, or repayment and the right of the Bank to
obtain any other benefit
- 19 -
<PAGE>
relief or allowance which may be available to it) such amount, if any,
as the Bank in its absolute discretion shall determine will leave the
Bank in no worse position than the Bank would have been in if the
deduction or withholding had not been required PROVIDED THAT:-
(1) the Bank shall have an absolute discretion as to the time at
which and the order and manner in which it realises or
utilises any Tax benefit and shall not be obliged to arrange
its business and tax affairs in any particular way in order to
be eligible for any credit or refund or similar benefit;
(2) the Bank shall not be obliged to disclose any information
regarding its business, tax affairs or tax computations;
(3) if the Bank has made a payment to the Company pursuant to this
Clause 10.4.3 on account of any Tax benefit and it
subsequently transpires that the Bank did not receive that Tax
benefit, or received a lesser Tax benefit, the Company shall
on demand pay to the Bank such sum as the Bank may determine
as being necessary to restore the after-tax position of the
Bank to that which it would have been had no adjustment or the
correct adjustment (as the case may require) under this
proviso (3) been made. Any sums payable by the Company to the
Bank under this proviso (3) shall be subject to the provisions
of Clause 20.5;
(4) the Bank shall not be obliged to make any payment under this
Clause 10.4 if, by doing so, it would contravene the terms of
any applicable law or any notice, direction or requirement of
any governmental or regulatory authority (whether or not
having the force of law).
10.5 If the Company is required to make an increased payment under Clause
10.4.2 above (but only so long as such requirement exists), subject to
giving to the Bank not less than 10 days' prior written notice (which
shall be irrevocable) the Company may prepay the Term Loan or any part
thereof together with accrued interest thereon. Any such prepayment
shall be subject to the provisions of Clause 8.3.
11. SECURITY
11.1 The obligations of the Company under this Agreement shall be secured
by the interests and rights conferred on the Bank under the Security
Documents.
11.2 It is hereby agreed that all obligations and liabilities of the
Company to the Bank incurred under or in connection with the Interest
Rate Protection Contracts shall be treated, for all purposes, as
obligations and liabilities incurred under this Agreement and that,
for the avoidance of doubt, the Company's obligations and liabilities
under the Interest Rate Protection Contracts shall be secured pursuant
to the terms of the Security Documents.
12. REPRESENTATIONS AND WARRANTIES
12.1 The Company acknowledges that the Bank has entered into this Agreement
in full reliance on the following statements and hereby represents and
warrants to the Bank that:-
(a) each Group Company is a private limited company duly
incorporated and validly existing under the laws of England
and each of them possesses the capacity to sue and be sued in
its own name and has the power to carry on its business as now
being conducted and to own its property and other assets;
- 20 -
<PAGE>
(b) each Group Company has or will have the power to execute,
deliver and perform its obligations under each of the Facility
Documents, the Acquisition Documents, and the Techdis
Acquisition Agreement and any other document or instrument
executed, delivered or to be executed or delivered by it under
any of such documents; all necessary corporate, shareholder
and other action has been taken or will be taken to authorise
the execution, delivery and performance of the same and no
limitation on its powers to borrow, to guarantee and to grant
security will be exceeded as a result of the transactions
contemplated by such documents;
(c) the Facility Documents, the Acquisition Documents, the Techdis
Acquisition Agreement and any other document or instrument
executed or delivered or to be executed or delivered by any
Group Company thereunder constitute or. as the case may be,
will constitute valid and legally binding obligations of the
Group Companies which are party thereto and, in the case of
the Acquisition Agreement of Arrow;
(d) the execution and delivery of the Facility Documents, the
Acquisition Documents, the Techdis Acquisition Agreement and
any other document or instrument executed or delivered or to
be executed or delivered thereunder by any Group Company (as
applicable), and the performance of obligations thereunder,
and compliance with the provisions thereof, will not (i)
contravene any existing applicable law, statute, rule or
regulation or any judgment, decree or permit to which any of
the same are subject, (ii) conflict with, or result in any
breach of any of the terms of, or constitute a default under,
any agreement or other instrument to which any Group Company
is a party or is subject or by which it or any of its property
is bound, (iii) contravene or conflict with any provision of
the Memorandum and Articles of Association of any Group
Company;
(e) all licences, consents and authorisations as are or may be
necessary to enable each Group Company to carry on its
business at the date hereof and to perform its obligations
under the Facility Documents (other than the Distribution
Centre Mortgage, where this representation and warranty is
given before the same has been duly executed and delivered),
the Acquisition Agreement and the Techdis Acquisition
Agreement and to fulfil the transactions contemplated thereby
are in full force and effect;
(f) no Group Company has taken any corporate action nor is any
Group Company aware that any steps have been taken or legal
proceedings started or threatened in writing against any Group
Company for winding-up, dissolution or re-organisation or for
the appointment of a receiver, administrative receiver,
administrator, trustee or similar officer of it or of all or
any material part of its assets (for the purposes of this
representation and warranty "material" shall mean the
aggregate amount of all claims arising under actions of the
type referred to in this Clause 12.1(f) which amount shall not
exceed 5 per cent of the consolidated net assets of the Group
as shown by the latest Accounts);
(g) no Group Company is in breach of or default under any
agreement to which it is a party or which is binding on it or
any of its assets to an extent or in a manner which would be
likely to have a material adverse effect on the consolidated
financial condition of the Group taken as a whole;
(h) no legal action, litigation, or administrative proceeding is
taking place or has been threatened in writing against any
Group Company and, so far as
- 21 -
<PAGE>
the Company is aware, no such legal action, litigation or
administrative proceeding is pending or threatened;
(i) Schedule 5 contains a true and complete list of all Group
Companies all of which are beneficially owned (directly or
indirectly) by the Company;
(j) other than Permitted Encumbrances, no Encumbrance exists over
all or any of the present or future revenues or assets of any
Group Company;
(k) the Reference Accounts were, save as specified therein,
prepared in accordance with accounting principles generally
accepted in the United Kingdom consistently applied and give a
true and fair view of the state of affairs of the Company and
its Subsidiaries and Jermyn and its Subsidiaries as at the
date to which they are made up and as at such date there were
no material liabilities of the Company and its Subsidiaries or
Jermyn and its Subsidiaries which were not disclosed by or
shown as being provided for in such accounts which ought to
have been disclosed and (other than as disclosed in the
Financial Information) since such date there has been no
material adverse change in the consolidated financial
condition or business of the Group taken as a whole;
(l) all information prepared by the Company for inclusion in the
Financial Information, or prepared by the Company and supplied
to Messrs Ernst & Young for the purpose of compiling the
Financial Information, was at 10th January 1992, in the case
of factual information, true and correct in all material
respects and, in the case of projections fair and reasonable
and without prejudice to the generality of the foregoing:-
(i) the forecasts contained in the Financial Information
have been diligently prepared and the assumptions
upon which they are based as to the future prospects
of the business of the Group have been carefully
considered and are honestly believed to be reasonable
having regard to the information available and to the
market conditions prevailing at the time of their
preparation and that the Company has made all
reasonable enquiries so as to ascertain (so far as
possible) all such information and market conditions
which are relevant to their preparation; and
(ii) save as disclosed in the Financial Information there
is no fact or matter known to the Company concerning
the business or the affairs of the Group or relating
to the Financial Information which is or might be
material for disclosure to a lender contemplating
granting facilities to the Company of the kind
provided for in this Agreement and on the terms of
this Agreement;
(m) the Accounts have been prepared in accordance with GAAP and
give a true and fair view of the state of affairs of the Group
as at the date to which they are made up and as at such date
there were no material liabilities of any Group Company not
disclosed in the Accounts which ought to have been disclosed
and (other than as disclosed in the Financial Information)
since such date there has been no material adverse change in
the financial condition or prospects of the Group;
- 22 -
<PAGE>
(n) the copies of the Memorandum and Articles of Association and
Certificate of Incorporation of each Charging Group Company
and of the resolutions of the boards of each of those
companies certified by their respective duly authorised
officers produced to the Bank on or prior to 22nd December
1994 are true up to date and complete copies;
(o) save pursuant to the Shares Charge, none of the share capital
of any Group Company is under option or mortgaged or charged
or otherwise encumbered;
(p) (a) no Encumbrances save for Permitted Encumbrances will
exist over any assets of any Group Company (save
pursuant to the Security Documents); and
(b) no Group Company will have any Indebtedness
outstanding (save under this Agreement, or otherwise
permitted under Clause 13.4(f);
(q) Arrow, EDI and any other Subsidiary of Arrow, between them,
beneficially own at least 75% of the issued share capital of
the Company; and
(r) Arrow beneficially owns at least 51% of the issued share
capital of EDI.
12.2 The representations and warranties set out in Clause 12.1(a) through
(o) inclusive shall survive the execution of this Agreement and the
making of each Drawing and subject to Clause 12.3 shall be deemed to
be repeated by the Company on each Drawdown Date and on each Interest
Date as if made with reference to the facts and circumstances existing
at that time save that:-
(a) the representation and warranty contained in Clause 12.1(h)
shall, when repeated on each Interest Date and Drawdown Date,
be qualified by the addition at the end of the words "which
would be likely to have a material adverse affect on the
financial condition of the Group taken as a whole";
(b) without prejudice to the rights of the Bank in respect of the
period prior thereto, if at any time after 22nd December 1994
it transpires that any of such representations and warranties
are incorrect as at the date hereof or such Drawdown Date, the
representations and warranties contained in sub-Clauses (i),
(l) and (n) shall not be repeated on each Interest Date or
Drawdown Date;
(c) the representation and warranty contained in Clause 12.1(k)
shall not be given until the first Drawdown Date after the
Reference Accounts are finalised and dated.
12.3 The Company may, before each Drawdown Date under the Term Loan
Facility or each Interest Date, disclose to the Bank in writing such
facts and circumstances as the Company considers relevant to qualify
any such representation and warranty save in respect of the
representations and warranties repeated at Clause 12.1(h), (i) and (j).
Thereafter on each occasion when such representation and warranty is
deemed to be repeated, it shall be deemed to be qualified by such
disclosure, and the Company shall be deemed to make a further
representation and warranty, to be repeated on each Drawdown Date and
each Interest Date with reference to the facts and circumstances
existing at that time, that such disclosed facts and circumstances are
true and subsisting respectively and it is expressly agreed such
disclosure shall only affect the provisions of Clause 15.1(c).
- 23 -
<PAGE>
13. UNDERTAKINGS
13.1 During the Security Period the Company undertakes with the Bank to:-
(a) inform the Bank of any occurrence (including without
limitation any third party claim or liability) of which it
becomes aware which would or would be likely to affect
adversely its ability to perform its obligations under the
Facility Documents and of any Default or Potential Default,
promptly upon becoming aware thereof, and will from time to
time, if so requested by the Bank, confirm to the Bank in
writing that, save as otherwise stated in such confirmation,
no such occurrence or Default or Potential Default has
occurred and is continuing;
(b) as soon as the same become available, but in any event within
120 days after the end of each of its Financial Years, deliver
to the Bank 2 prints of its Accounts for such Financial Year
together with the Auditor's report thereon and a copy of the
management letter (if any) addressed by the Auditors to the
directors in connection with the auditing of such Accounts
together with 2 prints of the audited accounts of each Group
Company in the form that is required to be registered with the
Registrar of Companies;
(c) provide the Bank as soon as available (and, in any event
within 30 days of the end of each month with monthly
management accounts (incorporating profit and loss accounts,
balance sheets and cash flow summaries) relating to the Group
in a form satisfactory to the Bank together with revised cash
flow forecasts showing the position for the balance of each
then current Financial Year in a form satisfactory to the Bank
and in a form which can be compared with the projections
provided to the Bank under Clause 13.1(d) below together with
a commentary on significant variances against such projections
provided to the Bank;
(d) (i) prior to the end of each Financial Year deliver to the
Bank copies of such budgetary information as is then available
in such form as then prepared and (ii) as soon as the
following is available but in any event no later than 60 days
after the commencement of each successive financial year,
deliver to the Bank 2 copies of a projected consolidated
profit and loss account, balance sheet and cash flow statement
(including details of cash disbursements), and a projected
consolidated statement of the source and application of funds
for the Group for that Financial Year, which shall be broken
down to show the consolidated position of the Group as at the
end of each month,
(e) maintain the accounting reference date of each member of the
Group at 31st December;
(f) furnish to the Bank such information about the business,
financial condition, operations and prospects of any Group
Company as the Bank may from time to time reasonably require;
(g) promptly inform the Bank of:-
(i) any acquisition of beneficial ownership of common
stock in Arrow amounting (whether by one transaction
or a series of transactions) to 5% or more of the
then issued common stock of Arrow; or
- 24 -
<PAGE>
(ii) any acquisition of 5% or more of the then issued
common stock of Arrow by any beneficial owner of 5%
or more of the then issued common stock of Arrow; or
(iii) any change in the beneficial ownership of any common
stock in Arrow relevant to the provisions of Clause
15.1(r);
in any such case of which it or any of its directors are
aware, promptly after becoming so aware.
13.2 Except as the Bank may otherwise agree in writing, the Company hereby
undertakes with the Bank that during the Security Period:-
(a) the ratio of EBIT to Total Interest Costs in respect of each
Financial Year of the Company ending on each date referred to
in Column A below shall not be less than the ratio set out in
Column B below opposite such date:
<TABLE>
<CAPTION>
Column A Column B
-------- --------
<S> <C>
31st December 1994 5.30:1
31st December 1995 2.80:1
31st December 1996 3.90:1
31st December 1997 4.80:1
31st December 1998 4.80:1
</TABLE>
(b) the ratio of Total Debt to Tangible Net Worth of the Group for
each Financial Year of the Company ending on a date listed in
Column A below shall not at any time during such Financial
Year exceed the ratio set opposite each date in Column B
below:
<TABLE>
<CAPTION>
Column A Column B
-------- --------
<S> <C>
31st December 1994 0.60:1
31st December 1995 0.55:1
31st December 1996 0.40:1
31st December 1997 0.30:1
31st December 1998 0.30:1
31st December 1999 0.30:1
</TABLE>
(c) the Capital Expenditure for the Group in each of the Financial
Year of the Company ending on a date listed in Column A below
will not exceed the figure stated in Column B below:
<TABLE>
<CAPTION>
Column A Column B
-------- --------
<S> <C>
31st December 1994 Pound Sterling 4,800,000
31st December 1995 Pound Sterling 5,000,000
31st December 1996 Pound Sterling 2,000,000
31st December 1997 Pound Sterling 2,000,000
31st December 1998 Pound Sterling 2,000,000
31st December 1999 Pound Sterling 2,000,000
</TABLE>
(d) it will seek to procure (so far as the Company is able to do)
that the Auditors will at the Company's cost on the adoption
of the Accounts for each Financial Year of the Company give a
certificate in a form satisfactory to the Bank certifying that
the Company is not in breach of the financial covenants set
out in Clauses 13.2 (a), (b) and (c) for the period or at the
year end in respect of which the Accounts are made up.
- 25 -
<PAGE>
13.3 During the Security Period, the Company shall itself and (where
applicable) shall procure that each of the other members of the Group
shall, save with the prior written consent of the Bank (such consent
not to be unreasonably withheld or delayed):-
(a) do all things within its control necessary to maintain its
corporate existence;
(b) ensure that it has the right and is duly qualified to conduct
its business as it is conducted in all applicable
jurisdictions, and will use its reasonable endeavours to
obtain and maintain all rights necessary for the conduct of
its business;
(c) carry on its business in a prudent manner, taking into account
the type of business involved and its usual practice;
(d) ensure that its assets are kept in good and substantial repair
and that it complies with any contractual obligations relating
to repair of such assets, subject to the provisions of the
Security Documents;
(e) at all times comply substantially with all laws and
regulations of significant effect to it in respect of the
conduct of the Group's business and obtain and maintain in
full force and effect all governmental and other regulatory
consents, licences and approvals required for the conduct of
any part of the Group's business and notify the Bank in
writing promptly upon its learning of any violation by any
Group Company of any law, statute, regulation or ordinance of
any government entity, or of any agent thereof, applicable to
any Group Company which violation in any respect would or is
likely materially and adversely to affect the Group's business
or the security constituted by any of the Security Documents;
(f) effect and maintain insurance over and in respect of its
business and assets (including insurance against the loss of
profits) against such risks and in such amounts as the Bank
may from time to time require, and, in any event, against such
risks and for such amounts as is normal for a business of the
type being carried on by the relevant Group Company, and, on
demand, produce to the Bank receipts for the last premiums
payable in respect of such insurances;
(g) apply the proceeds of insurances (i) insofar as they represent
the destruction of a capital asset either in replacement
thereof or in the purchase of a capital asset of a similar
nature or purpose or in prepayment (or permanent reduction) of
first, the Term Loan and second, the Working Capital Facility
Liabilities and (ii) insofar as they represent damage to any
asset in repair or replacement of that asset or in the
purchase of a capital asset of a similar nature or purpose or
in prepayment of first, the Term Loan and second, the Working
Capital Facility Liabilities;
(h) promptly after the same are instituted and served upon the
relevant Group Company or, to its knowledge, threatened,
provide details to the Bank of any litigation, arbitration or
administrative proceedings which affect any Group Company and
which involve liability or potential liability (other than
costs) in aggregate in excess of pound sterling 300,000;
(i) permit the Bank and any person (being an accountant, auditor,
solicitor, valuer or other professional advisor to the Bank,
or an officer or employee of any subsidiary of the Bank
authorised by the Bank) to have,
- 26 -
<PAGE>
at all reasonable times during normal business hours and on
reasonable notice subject to such persons being bound by
similar codes of confidentiality to that owed by a bank to its
customer, access to the premises and accounting books and
other financial records of any Group Company, to make extracts
from and take copies of any such books or records, and to
discuss any matter with its officers;
(j) promptly upon registration of any transfer of any shares in
the Company, inform the Bank of such transfer, and promptly
inform the Bank of any change in the beneficial ownership of
any such shares, of which the Company or its directors become
aware;
(k) procure that any company which becomes a Group Company, and
which is not a Group Dormant Company, executes such guarantees
and charges (if appropriate in substantially the form of the
Guarantee and the Debenture) in favour of the Bank as the Bank
may lawfully require;
(l) take all necessary steps to ensure that no payment of
principal, interest or other sums made to the Bank under this
Agreement or the Security Documents is made in breach of the
provisions of any applicable law including, in particular
Sections 151-158 (inclusive) of the Companies Act 1985;
(m) pay and discharge all Taxes and governmental charges prior to
the date on which the same become overdue unless, and only to
the extent that, such Taxes and charges shall be contested in
good faith by appropriate proceedings, pending determination
of which payment may lawfully be withheld, and there shall be
set aside adequate reserves with respect to any such Taxes or
charges so contested in accordance with GAAP;
(n) procure that all Indebtedness (other than Indebtedness arising
in the ordinary course of trading) of any Group Company to
Arrow or any Subsidiary of Arrow other than a Group Company is
subordinated to the Indebtedness owing to the Bank hereunder
in terms satisfactory to the Bank;
(o) within 90 days after the date hereof the Company and all
other Group Companies or its Subsidiaries shall (where
appropriate) have opened all necessary accounts with the Bank
and maintain all of the Group's UK transmission banking
business with the Bank; and
(p) procure that (i) the Group Dormant Companies shall not all
together own, beneficially or legally, any property or assets
whose aggregate value exceeds pound sterling 5,000 in total,
and that (ii) no Group Dormant Company shall carry on any
business or trading or other activity unless (x) in the case
of (i) such Group Dormant Companies as shall be necessary to
ensure the remaining Group Dormant Companies comply with (i)
and, in the case of (ii) that Group Dormant Company, have
first executed and delivered to the Bank a Guarantee and
Debenture substantially in the form of the Guarantee and the
Debenture, and (y) the condition in Clause 13.3(1) in relation
to the Company has been satisfied in relation to that Group
Dormant Company mutatis mutandis.
13.4 During the Security Period the Company shall not, and shall procure
that no Group Company will, without the prior written consent of the
Bank (such consent not to be unreasonably withheld or delayed):-
- 27 -
<PAGE>
(a) make any change in its business as presently conducted, which
would result in a substantial change in the business carried
on by the Group as a whole, or carry on any other business
which is substantial in relation to the business of the Group
as presently conducted;
(b) sell, transfer, lease or otherwise dispose of all or part of
its assets, other than:-
(i) sales of stock made in the ordinary course of trading
on normal credit terms taking into account the type
of business involved and the Company's usual
practice,
(ii) disposals by one Group Company to another Group
Company provided that the Group Company receiving the
asset:-
(a) is a wholly owned Subsidiary of the Company
incorporated in England;
(b) has net assets both before and after
receiving the asset; and
(c) is a Charging Group Company;
(iii) disposals of assets for market value on an
arms-length basis for consideration payable on normal
commercial terms where the consideration does not
exceed pound sterling 200,000 for each individual
asset;
(c) sell or otherwise dispose of any asset on terms whereby such
asset is or may be leased to or re-acquired on credit terms by
itself or any other Group Company;
(d) acquire any asset (other than the Distribution Centre
Property) which costs more than pound sterling 25,000
otherwise than in the ordinary course and for the purposes of
its business (other than the acquisition of Techdis under the
Techdis Acquisition Agreement);
(e) enter or contract to enter into any hire purchase, conditional
sale or leasing agreement in respect of any asset, where the
consideration payable (or where the market value of the
asset) exceeds pound sterling 50,000;
(f) incur or permit to subsist any Indebtedness which when
aggregated with the Indebtedness of other members of the Group
from time to time will exceed pound sterling 750,000 other
than:-
(i) pursuant to this Agreement;
(ii) as subordinated under a subordination agreement
entered into pursuant to Clause 13.3(n); and
(iii) Indebtedness owed by one Group Company to another
Group Company provided that both Group Companies are
wholly owned subsidiaries (direct or indirect) of the
Company, and have guaranteed the obligations of the
Company to the Bank under this Agreement supported by
mortgage debentures or such other security as the
Bank may require;
- 28 -
<PAGE>
(g) create or permit to subsist any Encumbrance, other than
Permitted Encumbrances;
(h) pay any fees or commissions to any person other than on
arms-length terms, and for the purposes of carrying on its
business;
(i) make any loans or give any credit (other than normal trade
credit) to any person, or give any guarantee or indemnity in
respect of the obligations of any person other than:-
(i) pursuant to this Agreement;
(ii) the making of loans or giving of credit to any
Charging Group Company;
(iii) loans to employees of any Charging Group Company;
(j) incorporate or acquire any Subsidiary which is not a
subsidiary immediately after Completion (other than Techdis
and MMD);
(k) agree to any variation or amendment of:-
(i) the Acquisition Documents and the Techdis Acquisition
Agreement (other than of an administrative nature);
(ii) the Memorandum and Articles of Association of the
Company or any other Group Company;
(l) declare or pay any dividend or other distribution in respect
of the share capital of any class in the Company or any other
Group Company unless payable to another Group Company in the
UK;
(m) redeem or purchase any shares in the capital of the Company or
any other Group Company, or reduce the share capital of the
Company or any other Group Company;
(n) merge or consolidate with any other person;
(o) cease to be resident in the United Kingdom or transfer in
whole or in part the business or trade of the Company and each
Group Company to a person who is not resident in the United
Kingdom; and
(p) use or purport to use or apply any asset of any Group Company
for any purpose which shall cause any Group Company to be in
breach of s.151 of the Companies Act 1985.
14. FEES
14.1 The Company shall pay to the Bank a fee of 0.375 per cent. per annum
on the difference between the Term Loan Facility Limit and the Term
Loan. Such fee shall accrue from day to day on the basis of the
actual number of days elapsed and a year of 365 days, shall be payable
quarterly in arrears and on the Final Repayment Date, the first such
payment to be made three months from the date hereof.
14.2 All fees are exclusive of any VAT thereon which, if chargeable, shall
be paid by the Company.
- 29 -
<PAGE>
15. DEFAULT
15.1 Without prejudice to the Bank's rights under Clause 7 (Repayment) if:-
(a) any amount due and payable under this Agreement is not paid on
the due date save that if the relevant payment is not received
on the due date resulting either (i) from a technical failure
in the CHAPS or other banking transmission system used for the
payment of sums hereunder, or (ii) the inadvertent failure by
the Company to make such relevant payment on the due date
therefor, then there shall not be a Default hereunder until 3
Business Days including the original date for payment have
elapsed PROVIDED THAT the Bank shall, in the case of the
circumstances set out in Clause 15.1(a)(ii), be satisfied
that such failure was inadvertent; or
(b) the Company or any Charging Group Company is in breach of or
fails to comply in full with any provision of, or undertakings
on its part contained in, any of this Agreement and the
Security Documents, other than an obligation of the type
referred to in Clause 15.1(a) which, in any case, in the
Bank's opinion has or will have a material adverse effect on
the ability of the Company or any Charging Group Company to
perform its obligations hereunder or under the Security
Documents and, if capable of remedy, is not remedied within 10
Business Days of such breach or failure; or
(c) any representation, warranty or statement made to the Bank in
this Agreement, the Security Documents or any certificate or
document delivered by the Company or any Charging Group
Company pursuant hereto or thereto is or proves to be
incorrect, in the case of statements of fact, or not fair and
reasonable, in the case of views, opinions, projections or
forecasts, in each case when made or deemed to be repeated, in
a manner which in the Bank's reasonable opinion has or will
have a material adverse effect on the ability of the Company
or any Charging Group Company to perform its obligations
hereunder or under the Security Documents; or
(d) any Indebtedness of any Group Company (other than as
subordinated under a subordination agreement entered into
pursuant to Clause 13.3(n)) is not paid within 5 Business Days
after the due date or upon the expiry of any applicable grace
period or is declared to be or otherwise becomes due and
payable prior to its specified maturity date or any creditor
or creditors of any Group Company becomes entitled to declare
any Indebtedness of any Group Company due and payable prior to
its specified maturity date or any such Indebtedness to a
creditor or creditors of any Group Company becomes capable of
being declared due and payable prior to its stated maturity as
a result of a default which is analogous to those set out in
this Clause 15; or
(e) a creditor attaches or takes possession of, or a distress,
execution, sequestration or other process is levied or
enforced upon or sued out against, the whole or any part of
the undertakings, assets, rights or revenues of any Group
Company and is not discharged within 10 Business Days; or
(f) the whole or any material part (for the purposes of this
Clause 15.1(f) "material" shall mean a value of the assets of
the Group in aggregate of pound sterling 300,000 calculated by
reference to the latest Accounts delivered to the Bank as
varied, if relevant, by the management accounts delivered to
the
- 30 -
<PAGE>
Bank pursuant to Clause 13. 1 (c)) of the security granted
under the Security Documents fails or ceases to have full
force and effect or to be continuing or is terminated (or
purported to be terminated) or disputed or becomes the subject
of a bona fide dispute, in jeopardy, invalid or unenforceable;
or
(g) any Group Company suspends payment of its debts or is unable
or admits inability to pay its debts as they fall due or
commences negotiations with one or more of its creditors with
a view to the general readjustment or rescheduling of all or
part of its Indebtedness or proposes, or enters into any
composition or other arrangement for the benefit of its
creditors generally or any class of creditors or proceedings
are commenced in relation to any member of the Group under any
law, regulation or procedure relating to reconstruction or
readjustments of debts; or
(h) any Group Company takes any action, or any legal proceedings
which are not of a vexatious or frivolous nature are started
or other steps which are not of a vexatious or frivolous
nature are taken for (i) such company to be adjudicated or
found bankrupt or insolvent (ii) the winding-up or dissolution
of such company or (iii) the appointment of a liquidator or
trustee or of a receiver, administrative receiver, or similar
officer of such company or the whole or any part of its
undertakings, assets, rights or revenues in respect of which
the relevant Group Company has not commenced legal proceedings
to discharge the same within 5 Business Days of becoming aware
of such proceedings or steps other than pursuant to a solvent
member's voluntary liquidation or a solvent scheme of
arrangement or reconstruction, the terms of which have in each
case been previously approved by the Bank (such consent not to
be unreasonably withheld or delayed); or
(i) an application is made to the Court for an administration
order under the Insolvency Act 1986 in relation to any Group
Company; or
(j) any event or proceeding is taken with respect to any Group
Company in any jurisdiction to which it is subject which has
an effect substantially similar to any one of the events
mentioned in Clauses 15.1 (g), (h) or (i); or
(k) any Group Company suspends or ceases or threatens to suspend
or cease to carry on its business other than as a result of
the transfer by one Group Company to another Group Company
(the recipient fulfilling the conditions set out in Clause
13.4(b)(ii)(a) through (c) inclusive of the whole or a
substantial part of its business, or
(l) any encumbrancer takes possession of or a receiver is
appointed of all or any part of the property and assets of any
Charging Group Company provided always that the amount of all
claims by all such encumbrances only, shall not exceed in
aggregate pound sterling 300,000 (calculated by reference to
the latest Accounts delivered to the Bank as varied, if
relevant, by the management accounts delivered to the Bank
pursuant to Clause 13.1(c) of the Charging Group taken as a
whole; or
(m) any licence, authorisation. consent or approval at any time
necessary to enable any Group Company to conduct its business
shall be avoided, withheld or materially modified or shall
fail to remain in full force and effect, or the terms upon
which the same have been granted are not for the time being
complied with and the result or effect of any such event or
- 31 -
<PAGE>
occurrence is such as materially to prejudice, in the Bank's
reasonable opinion, its interests under the Facility
Documents; or
(n) at any time there occurs a change in the financial condition
or prospects of the Group taken as a whole, which event, in
the Bank's reasonable opinion, has or could be expected to
have a material adverse effect on the ability of the Company
to perform its obligations hereunder; or
(o) (i) any of Arrow, EDI, or any subsidiary of Arrow or EDI
accounting for at least 10% of Arrow's tangible net
worth calculated in accordance with generally
accepted accounting principles used in the U.S.A.,
shall voluntarily commence any proceeding or file any
petition seeking relief under Title 11 of the United
States Code or any other Federal or state bankruptcy,
insolvency, liquidation or similar law; or
(ii) any of Arrow, EDI and any subsidiary of Arrow or EDI
other than a Group Company shall (i) consent to the
institution of, or fail to contravene in a timely and
appropriate manner, any such proceeding or the filing
of any such petition as mentioned in sub-paragraph
(i) above, (ii) apply for or consent to the
appointment of a receiver, trustee, custodian,
sequestrator or similar official for itself or for a
substantial part of its property or assets, (iii)
file an answer admitting the material allegations of
a petition filed against it in any such proceedings,
(iv) make a general assignment for the benefit of
creditors, (v) become unable, admit in writing its
inability or fail generally to pay its debts as they
become due, or (vi) take corporate or other action
for the purpose of effecting any of the foregoing; or
(iii) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of
competent jurisdiction seeking (i) relief in respect
of any of Arrow, EDI and any subsidiary of Arrow or
EDI other than a Group Company, or a substantial part
of the property or assets of any of Arrow, EDI and
any subsidiary of Arrow or EDI under Title 11 of the
United States Code or any other Federal or state
bankruptcy, insolvency, receivership or similar law,
(ii) the appointment of a receiver, trustee,
custodian, sequestrator or similar official for any
of Arrow, EDI and any subsidiary of Arrow or EDI
other than a Group Company or for a substantial part
of the property of any of Arrow or EDI; and the
relevant company has not commenced legal proceedings
in order to dismiss or unstay such proceeding or
petition within 10 days of becoming aware of the same
or there shall be entered an order or decree
approving or ordering any of the foregoing; or
(iv) any event occurs or proceeding is taken with respect
to any of Arrow, EDI and any subsidiary of Arrow or
EDI other than a Group Company in any jurisdiction to
which such company is subject which has an effect
equivalent or similar to any of the events mentioned
in paragraphs (i) to (iii) above; or
(p) all or any part of the property or undertakings of any Group
Company is compulsorily acquired by or by the order of any
local or other governmental authority and as a result the
business of the Group taken as a whole is materially adversely
affected; or
- 32 -
<PAGE>
(q) whilst it remains the immediate holding company of the
Company, EDI ceases to be a wholly-owned subsidiary of Arrow,
or the Company ceases to be a Subsidiary of EDI, in each case
other than by way of transfer of the whole or any part of the
share capital of EDI or the Company to another Subsidiary of
Arrow provided always that security shall be granted to the
Bank in substantially the same form as the Bank's security at
the date hereof and a subordination agreement as the Bank
considers necessary shall be entered into by the Company and
that Subsidiary other than pursuant to a solvent members'
voluntary liquidation or a solvent scheme of arrangement or
reconstruction, in any such case carried out with the prior
written consent of the Bank (such consent not to be
unreasonably withheld or delayed), where the resulting entity
forthwith gives a guarantee and debenture or such other
security as the Bank shall require to the Bank in such form as
the Bank shall require; or
(r) the common stock of Arrow ceases permanently to be dealt in or
is suspended for a period exceeding 5 Business Days on a
recognised stock exchange; or any person or persons acting
together acquire common stock in Arrow which, when aggregated
with common stock already owned by any of them, entities such
person or persons to exercise or control the exercise of 50%
or more of the votes exercisable at shareholders' meetings of
Arrow; or
(s) any event occurs or proceeding is taken with respect to any
holding company of the Company other than Arrow or any
Subsidiary of Arrow to which Clause 15.1 (o) applies in any
jurisdiction which such holding company is subject which has
an effect equivalent or similar to any of the events mentioned
in Clause 15.1(g),(h) or (i); or
(t) the facts or circumstances revealed by any disclosure under
Clause 12.3 are such that in the opinion of the Bank (acting
reasonably), they would or would be likely to prejudice
materially the ability of the Company to meet its obligations
under this Agreement or any of the Security Documents PROVIDED
THAT for the avoidance of doubt, such opinion may be formed by
the Bank at any time after the disclosure under Clause 12.3
has been made, whether before or at the time of or after any
repetition or repetitions under Clause 12 of the relevant
representation and warranty; or
(v) any Arrow Inc Indebtedness in excess of, in aggregate US
$10,000,000:
(i) is declared to be or otherwise becomes due and
payable prior to its specified maturity and is not
discharged within 10 Business Days; or
(ii) is not paid when due or within any applicable grace
period;
or any creditor or creditors of Arrow or any of its
subsidiaries (incorporated in the USA) exercise any right they
may have to preclude Arrow or any of its subsidiaries
(incorporated in the USA) from extending credit or making
advances to the Company;
then such event shall constitute a Default and at any time when any
Default remains unremedied (save in the case of a Default by any Group
Company, except for the Company, when a Default shall only occur if
such Default shall, in the opinion of the Bank, be such that such
Group Company or the Company is unable to meet its obligations under
this Agreement or the Security Documents) the Bank may, by notice to
the Company, cancel the Facilities and require the Company immediately
- 33 -
<PAGE>
to repay the Term Loan together with accrued interest thereon and
immediately to pay all other sums payable under the Facility
Documents, whereupon the same shall become immediately due and
payable.
15.2 If a Default has occurred then the Bank shall be entitled, but
not obliged, to appoint any firm of chartered accountants, to
undertake such investigations in the Company as it requires.
Clause 20.2 shall, mutatis mutandis, apply to the costs
incurred as a result of the implementation of the provisions
of this Clause 15.2.
16. SET-OFF
The Company authorises the Bank to apply any credit balance on any
account of the Company with the Bank in satisfaction of any sum due
and payable by the Company to the Bank and for this purpose the Bank
is authorised to purchase with the money standing to the credit of any
such account such other currencies as may be necessary to effect such
application.
17. SEVERABILITY, WAIVERS, REMEDIES CUMULATIVE
17.1 If at any time any provision hereof is or becomes illegal, invalid or
unenforceable in any respect under the law of any jurisdiction neither
the legality, validity or enforceability of the remaining provisions
hereof nor the legality, validity or enforceability of such provision
under the law of any other jurisdiction shall in any way be affected
or impaired thereby.
17.2 No failure to exercise, nor any delay in exercising, any right or
remedy hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any right or remedy prevent any further
or other exercise thereof or the exercise of any other right or
remedy. The rights and remedies herein provided are cumulative and
not exclusive of any fights or remedies provided by law.
18. NOTICES
18.1 Each communication to be made hereunder shall be made in writing and
may be made by letter or facsimile, and each communication by the Bank
hereunder shall be copied to Arrow at the address set out in Clause
18.3(C) PROVIDED THAT inadvertent failure to send such copy
communication or for Arrow to receive the same shall not invalidate
the service of any communication hereunder AND PROVIDED FURTHER THAT
each communication to the Bank shall be delivered to all addresses
(A1), (A2) and (A3) save for communications pursuant to Clause 13.1
which shall be sent only to the Bank addressee at the address set out
in (A2).
18.2 Any communication or document to be made or delivered by one person to
another pursuant to this Agreement shall (unless the one has by 15
days' written notice to the other specified another address) be made
or delivered to that other person at the address given in Clause 18.3.
- 34 -
<PAGE>
18.3 The addresses referred to in Clause 18.2 above are:-
(A1) for notices to the Bank:-
National Westminster Bank Plc
Corporate Banking Group
National Westminster House
Trinity Gardens
9-11 Bromham Road
Bedford MK40 2UQ
Attention: George Derbyshire
Facsimile: 0234 272503
(A2) National Westminster Bank Plc
Acquisition Finance
135 Bishopsgate
London EC2M 3UR
Attention: P.A.S.C. Harmer
Facsimile: 071 375 5464
(A3) National Westminster Bank Plc
Group Treasury Settlement
Level 6
King's Cross House
200 Pentonville Road
London N1 9HL
Attention: Manager, Commercial Loans
Facsimile: 071 239 8257
(B1) for notices to the Company:
Arrow Electronics (UK) Limited
St. Martins Business Centre
Cambridge Road
Bedford MK42 OLF
Attention: Managing Director
Facsimile: 0234 211434
(B2) Arrow Electronics (UK) Limited
Unit 11
Vestry Road Industrial Estate
Sevenoaks
Kent TN14 5EU
Attention: Alistair Oag
Facsimile: 0732 740394
(C) for copies to Arrow:
Arrow Electronics, Inc.
25 Hub Drive
Melville
New York
USA
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<PAGE>
Attention: R.E. Klatell
Facsimile: 0101 516 391 1683
18.4 Any notice to the Company shall be deemed to have been given:-
(a) if sent by facsimile transmission, on the Business Day on
which transmitted or if it is transmitted on a day which is
not a Business Day or after 5.30 p.m. on any Business Day, on
the next following Business Day;
(b) in the case of a written notice lodged by hand at the time of
actual delivery or if it is delivered on a day which is not a
Business Day or after 5.30 p.m. on any Business Day, on the
next following Business Day;
(c) if posted, on the second Business Day following the day on
which it was properly despatched by first class mail postage
prepaid.
18.5 Any notice to the Bank shall be deemed to have been given only on
actual receipt by each of the addressees referred to in (A1), (A2) and
(A3) above.
19. ASSIGMENTS
19.1 This agreement shall be binding upon and enure to the benefit of the
parties hereto and their respective successors and assigns.
19.2 The Company may not assign or transfer all or any of its rights,
benefits and obligations hereunder without the prior written consent
of the Bank.
19.3 The Bank may assign or transfer any of its rights and obligations
under this Agreement to any Qualifying Bank and the Company shall
enter into such documents as the Bank shall require to effect or
perfect any such transfer or novate any of the Bank's obligations to
the transferee.
19.4 The Bank may, after it has informed the Company, disclose to a
proposed assignee, transferee or other person proposing to enter into
a contract with the Bank regarding this Agreement such information in
the possession of the Bank relating to the Company, including, without
limitation, this Agreement, the Security Documents and any of the
Financial Information, as it sees fit provided that it shall require
any proposed assignee or transferee to enter into a confidentiality
undertaking acceptable to the Bank and the Company (acting
reasonably).
20. COSTS AND EXPENSES
20.1 The Company undertakes on demand, to reimburse the Bank all
out-of-pocket costs and expenses (including legal, audit and valuation
fees) reasonably incurred by it in the review, negotiation,
preparation and execution of the Facility Documents, the Acquisition
Agreement, the Techdis Acquisition Agreement and any other documents
incidental hereto or thereto.
20.2 The Company shall from time to time on demand reimburse the Bank for
all costs and expenses (including legal fees) incurred in or in
connection with the preservation and/or enforcement of any of the
rights of the Bank under the Facility Documents or in connection with
any proposed amendment to any of the Facility Documents or any request
for a consent or waiver hereunder or thereunder.
- 36 -
<PAGE>
20.3 All stamp, documentary, registration or other like duties or Taxes,
including any penalties, additions, fines, surcharges or interest
relating thereto, which are imposed or chargeable on or in connection
with any of the Facility Documents shall be paid by the Company.
20.4 (a) Subject to Clause (b) below, any VAT payable in respect of any
supply for VAT purposes made pursuant to or in connection with
any of the Facility Documents or any transaction or document
contemplated herein or therein made by the Bank shall be paid
on demand to the Bank by the Company and the Bank shall issue
or procure the issue of a VAT invoice in respect of each such
payment.
(b) All payments made by the Company under this Agreement and the
Security Documents are calculated without regard to VAT. If
any such payment constitutes the whole or any part of the
consideration for a taxable or deemed taxable supply (whether
that supply is taxable pursuant to the exercise of an option
or otherwise) by the Bank, the amount of that payment shall be
increased by an amount equal to the amount of VAT which is
chargeable in respect of the taxable supply in question.
(c) No payment or other consideration to be made or furnished by
the Bank to the Company pursuant to or in connection with this
Agreement or the Security Documents or any transaction or
document contemplated herein or therein may be increased or
added to by reference to (or as a result of any increase in
the rate of) VAT which shall be or may become chargeable in
respect of the taxable supply in question.
20.5 If the Bank makes a payment or suffers a loss in respect of which it
is entitled to be indemnified or reimbursed by the Company pursuant to
any provision of any of the Facility Documents and the Bank is advised
by the Bank's auditors that:-
(i) the loss or payment is not or is unlikely to be deductible or
wholly deductible in computing the profits of the Bank for the
purposes of Tax whilst the payment to be made by way of
indemnity or reimbursement (for the purpose of this Clause
20.5, the "Payment") by the Company will or is likely to be
taxable or partly taxable in the Bank's hands; or
(ii) the Payment is or is likely to be taxable or partly taxable in
the Bank's hands in any accounting period of the Bank earlier
than the accounting period in which the loss or payment is or
is likely to be deductible;
then:-
the Payment shall be increased to an amount ("the grossed-up Payment")
which is certified by the Bank's auditors as being equal, after taking
into account any Tax liability likely to be suffered or incurred by
the Bank in respect of the grossed-up Payment, to the amount that
would have been received by the Bank if the Payment by the Company had
not been taxable PROVIDED THAT if it is subsequently certified by the
Bank's auditors that any payment by the Company to the Bank under this
Clause 20.5 by way of grossed-up Payment was calculated on an
incorrect basis, such adjustment shall be made as between the Bank and
the Company as the Bank's auditors may certify to be necessary to
restore the after-tax position of the Bank to that which it would have
been if no such adjustment had been necessary.
- 37 -
<PAGE>
21. CURRENCY INDEMNITY
Any payment or payments made to or for the account of or received by
the Bank in respect of any monies or liabilities due, arising or
incurred by the Company to the Bank in a currency (the "Currency of
Payment") other than the currency in which the payment should have
been made pursuant to this Agreement (the "Currency of Obligation") in
whatever circumstances (including, without limitation, as a result of
a judgment against the Company) and for whatever reason shall only
constitute a discharge to the Company to the extent of the Currency of
Obligation amount which the Bank is able on the date or dates of
receipt of such payment or payments (or if not a Business Day on the
next succeeding Business Day) to purchase with the Currency of Payment
amount in the London foreign exchange market. If the amount of the
Currency of Obligation which the Bank is so able to purchase falls
short of the amount originally due to the Bank under this Agreement,
then the Company shall indemnify and hold the Bank harmless against
any loss or damage arising as a result thereof by paying to the Bank
that amount in the Currency of Obligation certified by the Bank as
necessary so to indemnify it (and, for the avoidance of doubt, the
provisions of this Clause 21 shall apply to any monies payable
pursuant to this Clause 21). It is hereby declared that this
indemnity shall constitute a separate and independent obligation from
the other obligations contained in this Agreement, shall give rise to
a separate and independent cause of action, shall apply irrespective
of any indulgence granted from time to time and shall continue in full
force and effect notwithstanding any judgment or order for a
liquidated sum or sums in respect of amounts due under this Agreement
or under any such judgment or order. The certificate of the Bank as
to the amount of any such loss or damage shall, in the absence of
manifest error, be conclusive and binding on the Company.
22. PUBLICITY
22.1 The Company agrees that it will not issue any press release or other
publicity material relating to the transactions contemplated by this
Agreement and the Techdis Acquisition Agreement which refers to the
Bank without obtaining the Bank's consent to the manner and context in
which the reference is made.
22.2 The costs of any publicity material in relation to this Clause shall,
mutatis mutandis, be subject to the provisions of Clause 22.
22.3 The Bank may not issue any press release or other publicity material
relating to the transaction contemplated by this Agreement and the
Techdis Acquisition Agreement which refers to the Company without
obtaining the Company's consent to the manner and context in which the
reference is made.
23 LAW
This Agreement shall be governed by and construed in accordance with
English law.
IN WITNESS whereof the parties hereto have caused this Agreement to be duly
executed the day and year first written above.
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<PAGE>
SIGNED by R. E. KLATELL )
for and on behalf of )
ARROW ELECTRONICS (UK) LIMITED ) ROBERT E. KLATELL
in the presence of:- )
Geoffrey Maddock
Solicitor, Herbert Smith
SIGNED by PIERS HARMER )
for and on behalf of )
NATIONAL WESTMINSTER BANK Plc ) PIERS HARMER
in the presence of:- )
Geoffrey Maddock
Solicitor, Herbert Smith
<PAGE>
SIGNED by )
for and on behalf of )
ARROW ELECTRONICS (UK) LIMITED ) ALISTAIR OAG
SIGNED by )
for and on behalf of )
NATIONAL WESTMINSTER BANK Plc ) PIERS HARMER
- 5 -
EXHIBIT 10(i)(i)
ARROW ELECTRONICS, INC.
STOCK OPTION PLAN - 1991
(as amended and restated) Through March 1995
ARTICLE 1
Establishment and Purpose
1.1 Establishment. Arrow Electronics, Inc., a New York
corporation (the "Company"), hereby amends and restates its stock option plan
for certain employees as described herein which shall be known as the ARROW
ELECTRONICS, INC. STOCK OPTION PLAN, as amended and restated (the "Plan"). The
Plan is intended to grant options which qualify as incentive stock options
satisfying the requirements of Section 422 of the Internal Revenue Code of
1986, as amended, and to grant nonqualified stock options which are not
intended to so qualify under said Section 422.
1.2 Purpose. The purpose of the Plan is to secure for
the Company and its shareholders the benefits of the incentive inherent in the
ownership of the Company's common stock by the key employees of the Company and
its Subsidiaries who are largely responsible for the Company's future growth
and financial success.
ARTICLE 2
Definitions
For purposes of the Plan, the following terms shall have the meanings provided
herein:
2.1 "Board" means the Board of Directors of the Company.
2.2 "Code" means the Internal Revenue Code of 1986, as
amended.
2.3 "Committee" means the committee provided in Section
3.1 or, if at any given time there is no committee serving, the Board.
2.4 "Disability" means total and permanent disability as
determined by the Committee.
2.5 "Incentive Option" means an option granted under the
Plan to purchase Shares and which is intended to qualify as an incentive stock
option under Section 422 of the Code.
<PAGE>
2.6 "Nonqualified Option" means an option granted under
the Plan to purchase Shares and which is not intended to qualify as an
Incentive Option.
2.7 "Option" means, collectively, Incentive Options and
Nonqualified Options.
2.8 "Shares" means shares of the Company's common stock,
par value $1 per share.
2.9 "Subsidiary" means any corporation which qualifies as
a "subsidiary corporation" of the Company under Section 424(f) of the Code or,
if applicable, as a "parent corporation" of the Company under Section 424(e) of
the Code.
ARTICLE 3
Administration
3.1 Administration. The Plan shall be administered by
the Board. The Board may appoint a Committee consisting of three or more
directors to administer the Plan and may, to the full extent permitted by law,
authorize and empower such Committee to do any and all things which the Board
is authorized and empowered to do with respect to the Plan. If a Committee is
appointed, no member thereof shall be an employee of the Company or a
Subsidiary or shall have been eligible within one year prior to his appointment
to receive an Option or to receive awards under any other plan of the Company
or its Subsidiaries under which participants are entitled to acquire stock,
stock options or stock appreciation rights of the Company or any of its
Subsidiaries. All subsequent references herein to the Committee shall be
deemed to refer to the Board if at the time there is no Committee serving.
3.2 Powers of the Committee. The Committee shall have
all the powers vested in it by the terms of the Plan, such powers to include
exclusive authority (within the limitations described herein) to select the
employees to be granted Options, to determine the number of Shares subject to,
and the terms of, the Options to be granted to each employee selected, to
determine the time when Options will be granted and the period during which
Options will be exercisable, and to prescribe the form of the instruments, if
any, embodying Options. The Committee shall be authorized to interpret the
Plan and the Options granted under the Plan, to establish, amend and rescind
any rules and regulations relating to the Plan, and to make any other
determinations which it believes necessary or advisable for the administration
of the Plan. The Committee may correct any defect, supply any omission or
reconcile any inconsistency in the Plan or in any Option in the manner and to
the extent the Committee deems necessary or desirable to carry it into effect.
Any decision of the Committee in the administration
<PAGE>
of the Plan, as described herein, shall be final and conclusive. The Committee
may act only by a majority of its members in office, except that the members
thereof may authorize any one or more of their number or any officer of the
Company to execute and deliver documents on behalf of the Committee.
ARTICLE 4
Eligibility and Participation
Options may be granted only to key employees of the Company
and its Subsidiaries. Any key employee of the Company or of a subsidiary shall
be eligible to receive one or more Incentive Options, provided at the time such
Incentive Option is granted, he does not own stock (including stock the
ownership of which is attributed to him pursuant to Section 424(d) of the Code)
possessing more than 10 percent of the total voting power of all classes of
stock of the Company or a Subsidiary.
ARTICLE 5
Shares Subject to Plan
5.1 Amount of Stock. There may be issued under the Plan
an aggregate of not more than 6,000,000 Shares, subject to adjustment as
provided in Section 5.2. Shares issued pursuant to the Plan may be either
authorized but unissued Shares or reacquired Shares, or both. In the event
that Options shall terminate or expire without being exercised in whole or in
part, new Options may be granted covering the Shares not purchased under such
lapsed Options.
5.2 Dilution and Other Adjustments. In the event of any
change in the outstanding Shares by reason of any stock split, stock dividend,
recapitalization, merger, consolidation, reorganization, combination or
exchange of shares or other similar event, if the Committee shall determine, in
its sole discretion, that such change equitably requires an adjustment in the
number or kind of shares that may be issued under the Plan, in the number or
kind of shares which are subject to outstanding Options, or in the purchase
price per share relating thereto, such adjustment shall be made by the
Committee and shall be conclusive and binding for all purposes of the Plan.
ARTICLE 6
Terms and Conditions of Options
6.1 Terms of Options. An Option granted under the Plan
shall be in such form as the Committee may from time to time approve. Each
Option shall be subject to the terms and
<PAGE>
conditions provided in this Article 6 and shall contain such additional terms
and conditions as the Committee may seem desirable, but in no event shall such
terms and conditions be inconsistent with the Plan. In addition, the terms and
conditionS of Incentive Options shall in all cases be consistent with the
provisions of the Code applicable to "incentive stock options" as described in
Section 422 of the Code.
6.2 Option Price. The purchase price per Share under an
Option will be determined by the Committee in its discretion, provided,
however, that the purchase price per Share under an Incentive Option may not be
less than the fair market value of a Share at the date the Incentive Option is
granted.
6.3 Option Period. The period during which an Option may
be exercised shall be fixed by the Committee, but no Incentive Option shall be
exercisable after the expiration of ten years from the date such Incentive
Option is granted and no Nonqualified Option shall be exercisable after the
expiration of ten years and one day from the date such Nonqualified Option is
granted.
6.4. Consideration. As consideration for the grant of an
Option, the optionee shall state his present intention to remain continuously
in the employ of the Company or a Subsidiary for at least one year from the
date the Option is granted. No Incentive Option shall be exercisable until
after the expiration of such one-year period. Except as provided in Section
6.7, the holder of an Option must be in the employ of the Company or a
Subsidiary at the time the Option is exercised. An optionee shall be deemed to
be in the employ of the Company or a Subsidiary during any period of military,
sick leave or other leave of absence meeting the requirements of Section
1.421-7(h)(2) of the Federal Income Tax Regulations, or similar or successor
section.
6.5 Exercise of Option. An Option may be exercised in
whole or in part from time to time during the option period (or, if determined
by the Committee, in specified installments during the option period) by giving
written notice of exercise to the Secretary of the Company specifying the
number of Shares to be purchased. Notice of exercise of Option must be
accompanied by payment in full of the purchase price either by cash or check or
in Shares owned by the optionee having a fair market value at the date of
exercise (as determined by the Committee) equal to such purchase price, or in a
combination of the foregoing. No Shares shall be issued in connection with the
exercise of an Option until full payment therefor has been made. An optionee
shall have the rights of a shareholder only with respect to Shares for which
certificates have been issued to him.
<PAGE>
6.6 Nontransferability of Options. No Option granted
under the Plan shall be transferable by the optionee otherwise than by will or
by the laws of descent and distribution and such Option shall be exercisable,
during his lifetime, only by him.
6.7 Retirement, Death or Disability of an Optionee.
(a) If an Option is exercisable in specified installments
as provided in Section 6.5 and if the optionee's employment with the
Company and its Subsidiaries terminates by reason of his death,
Disability or retirement under a retirement plan of the Company or a
Subsidiary at or after his normal retirement date or, with the consent
of the Committee, at an early retirement date, his Option shall be
exercisable in full, and any restrictions imposed upon exercise of the
Option by reason of the installment requirements shall be of no
further force and effect.
(b) If an optionee's employment with the Company or a
Subsidiary terminates by reason of his Disability, he may exercise his
Option during the period ending on the earlier of the date one year
from such termination of employment or expiration of the option period
provided in the Option pursuant to Section 6.3.
(c) In the event of the death of an optionee while the
employ of the Company or a Subsidiary, or within the one-year period
following his termination of employment by reason of Disability, or
within the three-month period following his retirement in accordance
with subparagraph (d), the Option granted to him shall be exercisable
by the executors, administrators, legatees or distributees of his
estate, as the case may be. In such case, the Option shall be
exercisable to the extent provided in the Option agreement, but in no
event shall such agreement provide that the number of shares remaining
subject to the Option be less than the number of Shares purchasable by
the employee on the date of his death nor more than the total number
of Shares remaining under the Option. The period during which such
Option may be exercised shall end on the earlier of the date one year
from the optionee's death or expiration of the option period provided
in the Option pursuant to Section 6.3. In the event an Option is
exercised by the executors, administrators, legatees or distributees
of the estate of a deceased optionee, the Company shall be under no
obligation to issue Shares thereunder unless and until the Company is
satisfied that the person or persons exercising the Option are the
duly appointed legal representatives of the deceased optionee's estate
or the proper legatees or distributees thereof.
<PAGE>
(d) If an optionee's employment with the Company and its
Subsidiaries terminates by reason of his retirement under a retirement
plan of the Company or a Subsidiary at or after his normal retirement
date or, with the consent of the Committee, at an early retirement
date, he may exercise his Option during the period ending on the
earlier of the date three months from such termination of employment
or expiration of the option period provided in the Option pursuant to
Section 6.3.
6.8 Annual Limitation For Incentive Options. The maximum
aggregate fair market value of the shares of stock of the Company or a
Subsidiary (determined as of the date of grant of the Incentive Option) for
which Incentive Options are exercisable for the first time by an employee
during any calendar year (under the Plan and all other incentive stock option
plans of the Company and its Subsidiaries) shall not exceed $100,000 as, and to
the extent, required by Section 422(d) of the Code.
6.9 Right of First Refusal. Shares acquired under the
Plan by an optionee may not be sold or otherwise disposed of in any way
(including a transfer by gift or by reason of the death of the optionee) until
the optionee (or his legal representative, legatee or distributee of his
estate) first offers to sell the Shares to the Company as herein provided. The
price per share at which the Shares shall be offered to the Company shall be
the closing price per Share reported on the Consolidated Tape (as such price is
reported in The Wall Street Journal) on the date the optionee's offer is
received by the Secretary of the Company. If the Company fails to accept the
offer to purchase such Shares within seven days after such date, the Shares
shall thereafter be free of all restrictions under the Plan.
ARTICLE 7
Miscellaneous Provisions
7.1 No Implied Rights. No employee or other person
shall have any claim or right to be granted an Option under the Plan. Neither
the Plan nor any action taken hereunder shall be construed as giving any
employee any right to be retained in the employ of the Company or any
Subsidiary or affect any right of the Company or any Subsidiary to terminate
any employee's employment.
7.2 Securities Law Compliance. No Shares shall be issued
hereunder unless counsel for the Company shall be satisfied that such issuance
will be in compliance with applicable Federal and State securities laws.
7.3 Ratification of Actions. By accepting any Option or
other benefits under the Plan, each employee and
<PAGE>
each person claiming under or through him shall be conclusively deemed to have
indicated his acceptance and ratification of, and consent to, any action taken
under the Plan by the Company, the Board or the Committee.
7.4 Gender. The masculine pronoun means the feminine and
the singular means the plural wherever appropriate.
ARTICLE 8
Amendments or Discontinuance
The Plan may be amended at any time and from time to time by
the Board but no amendment which increases the aggregate number of Shares which
may be issued pursuant to the Plan shall be effective unless and until the same
is approved by the shareholders of the Company. No amendment of the Plan shall
adversely affect any right of any optionee with respect to any option
theretofore granted without such optionee's written consent.
ARTICLE 9
Termination
The Plan shall terminate upon the earlier of the following
dates or events to occur:
(a) Upon the adoption of a resolution of the Board
terminating the Plan; or
(b) November 11, 1997.
No termination of the Plan shall alter or impair any of the
rights or obligations of any person, without his consent, under any option
theretofore granted under the Plan.
ARTICLE 10
Dissolution or Merger
Upon a dissolution or liquidation of the Company, or a sale of
substantially all of the assets of the Company and its Subsidiaries and the
acquiring entity does not substitute new and equivalent options for the
outstanding Options hereunder, or a merger or consolidation in which the
Company is not to be the surviving corporation and the surviving corporation
does not substitute new and equivalent options for the outstanding Options
hereunder, each optionee shall be given at least ten days prior written notice
of the occurrence of such event, every Option outstanding hereunder shall
become fully exercisable, and each optionee may
<PAGE>
exercise his option, in whole or in part, prior to or simultaneously with such
event. Upon the occurrence of any such event, any Option not exercised
pursuant hereto shall terminate.
ARTICLE 11
Shareholder Approval and Adoption
The Plan shall be submitted to the shareholders of the Company
for their approval and adoption and Options hereunder may be granted prior to
such approval and adoption but contingent upon such approval and adoption. The
shareholders of the Company shall be deemed to have approved and adopted the
Plan only if it is approved and adopted at a meeting of the shareholders duly
held by vote taken in the manner required by the laws of the State of New York.
EXHIBIT 10(j)(i)
ARROW ELECTRONICS, INC.
RESTRICTED STOCK PLAN - 1991
(as amended and restated) Through March 1995
ARTICLE 1
Establishment and Purpose
1.1 Establishment. Arrow Electronics, Inc., a New York
corporation (the "Company"), hereby amends and restates its restricted stock
plan for executives as described herein which shall be known as THE ARROW
ELECTRONICS, INC. RESTRICTED STOCK PLAN, as amended and restated (the "Plan").
1.2 Purpose. The Plan is intended to promote the
interests of the Company by providing a method pursuant to which certain key
employees of the Company and its Subsidiaries may become owners of shares of
Arrow Electronics, Inc. common stock, par value $1.00 per share ("Shares"),
under the terms and conditions of, and in the manner contemplated by, this Plan
and thereby encourage such employees to continue in the employ of the Company
or a Subsidiary.
ARTICLE 2
Administration
2.1 Administration. The Plan shall be administered by
the Board of Directors of the Company (the "Board"). The Board may appoint a
committee (the "Committee") consisting of three or more directors to administer
the Plan and may to the full extent permitted by law, authorize and empower
such Committee to do any and all things which the Board is authorized or
empowered to do with respect to the Plan. If a Committee is appointed, no
member thereof shall be an employee of the Company or a Subsidiary or shall
have been eligible within one year prior to his appointment to receive awards
of Shares ("Awards") under the Plan or to receive awards under any other plan
of the Company or its Subsidiaries under which participants are entitled to
acquire stock or stock options of the Company or any of its Subsidiaries. All
subsequent references herein to the Committee shall be deemed to refer to the
Board if at the time there is no Committee serving.
2.2 Powers of the Committee. The Committee shall have
all the powers vested in it by the terms of the Plan, such powers to include
exclusive authority (within the limitations described herein) to select the
employees to be granted Awards under the Plan, to determine the size and terms
of the Awards to be made to each employee selected, to
<PAGE>
determine the time when Awards will be granted, and to prescribe the form of
the instruments, if any, embodying Awards made under the Plan. The Committee
shall be authorized to interpret the Plan and the Awards granted under the
Plan, to establish, amend and rescind any rules and regulations relating to the
Plan, and to make any other determinations which it believes necessary or
advisable for the administration of the Plan. The Committee may correct any
defect or supply any omission or reconcile any inconsistency in the Plan or in
any Award in the manner and to the extent the Committee deems desirable to
carry it into effect. Any decision of the Committee in the administration of
the Plan, as described herein, shall be final and conclusive. The Committee
may act only by a majority of its members in office, except that the members
thereof may authorize any one or more of their number or any officer of the
Company to execute and deliver documents on behalf of the Committee.
ARTICLE 3
Eligibility and Participation
3.1 Eligibility. Shares, subject to restrictions as
hereafter specified, may be awarded only to key employees of the Company or a
Subsidiary.
3.2 Restricted Stock Awards. The Committee shall
determine the persons to whom Awards of Shares, subject to restrictions as
hereafter specified, will be made, the number of Shares covered by each Award,
and the time or times when Awards will be made. The Committee shall also
determine whether an employee to whom an Award under this Plan is made shall be
required to purchase the Shares subject to the Award from the Company for an
amount determined by the Committee but not in excess of $1.00 per Share. If
payment of such an amount is required, it shall be paid prior to the issuance
of the Shares to the employee.
ARTICLE 4
Shares Subject to Plan
4.1 Shares Subject to Plan. There may be issued under
the Plan an aggregate of not more than 1,480,000 Shares, subject to adjustment
as provided in Section 4.2. Shares issued pursuant to the Plan may be either
authorized but unissued Shares or reacquired Shares, or both. If any Shares
issued under the Plan shall be reacquired by the Company pursuant to Section
5.2, such Shares may again be issued under the Plan.
4.2 Dilution and other Adjustments. In the event of any
change in the outstanding Shares by reason of any
<PAGE>
stock split, stock dividend, recapitalization, merger, consolidation,
reorganization, combination or exchange of shares or other similar event, if
the Committee shall determine, in its discretion, that such change equitably
requires an adjustment in the number or kind of Shares that may be issued under
the Plan pursuant to Section 4.1, in the number or kind of Shares which have
been awarded to any person hereunder, or in the repurchase option price per
share relating thereto such adjustment shall be made by the Committee and shall
be conclusive and binding for all purposes of the Plan. Such adjustment may
include subjecting any additional Shares or other property received in respect
of the Shares issued pursuant to an Award to the restrictions imposed under the
Plan upon such Shares.
ARTICLE 5
Restrictions on Shares
5.1 Transferability. Shares issued pursuant to Section
3.2 may not be sold, assigned, transferred, pledged, alienated, hypothecated or
otherwise disposed of as long as the Company has the right to reacquire the
Shares as hereinafter provided in this Article 5.
5.2 Termination of Employment. If the Award grantee's
employment with the Company and its Subsidiaries terminates for any reason,
except as specified in section 5.3 prior to the end of the period specified in
section 5.4,
(a) if the Shares were transferred to the grantee
without his payment of any purchase price therefore, the Award
shall be forfeited and rescinded as to all Shares which are,
at the date of such termination of employment, subject to the
restrictions imposed hereunder, and the grantee shall promptly
return such Shares to the Company, or
(b) if the Shares were sold to the grantee
pursuant to Section 3.2, the Company shall have the option,
which it may exercise at any time within 90 days after the
grantee's termination of employment, to purchase such Shares
from the grantee at the price per Share at which the Shares
were sold to the grantee.
5.3 Retirement, Death, Total and Permanent Disability.
If an Award grantee's employment with the Company and its Subsidiaries
terminates by reason of his death, Disability or retirement under a retirement
plan of the Company or a Subsidiary at or after his normal retirement age or,
with the consent of the Committee, at an early retirement date, the
restrictions imposed upon any Shares pursuant to Sections 5.1 and 5.2 shall
lapse and be of no
<PAGE>
further force and effect. The Shares shall thereafter be freely transferable
by the grantee or his estate, subject to the right of first refusal provided
for in Section 5.5.
5.4 Lapse of Restrictions. Except as otherwise provided
above or as the Committee may otherwise determine, Shares subject to an Award
under the Plan will become free of the restrictions imposed by Sections 5.1 and
5.2, subject to the Company's right of first refusal as provided for in Section
5.5, according to the following schedule:
(a) 25% of the Shares on the first anniversary of
the date of the Award.
(b) 25% of the Shares on the second anniversary
thereof,
(c) 25% of the Shares an the third anniversary
thereof,
(d) 25% of the Shares on the fourth anniversary
thereof.
5.5 Right of First Refusal. Shares acquired under the
Plan by a grantee may not be sold or otherwise disposed of in any way
(including a transfer by gift or by reason of the death of the grantee) until
the grantee (or his personal representative) first offers to sell the Shares to
the Company as herein provided. The price per Share at which the Shares shall
be offered to the Company shall be the closing price per Share reported on the
Consolidated Tape (as such price is reported in The Wall Street Journal) on the
date the grantee's offer is received by the Secretary of the Company. If the
Company fails to accept the offer to purchase such Shares within seven days
after such date, the Shares shall thereafter be free of all restrictions under
this Plan.
5.6 Other Restrictions. The Committee shall impose such
other restrictions on any Shares issued pursuant to the Plan as it may deem
advisable, including, without limitation, restrictions under the Securities Act
of 1933, as amended, under the rules or regulations of any stock exchange upon
which the Shares or any other class of shares of the Company are then listed,
and under any blue sky or securities laws applicable to such Shares.
5.7 Certificate Legend. In addition to any legend placed
on certificates for Shares pursuant to Section 5.6, each certificate
representing Shares issued pursuant to the Plan shall bear the following legend
or such other legend as may be specified by the Committee:
"The shares represented by this certificate are partly paid, may not
be sold, assigned, transferred, pledged, alienated, hypothecated or
otherwise disposed of and are subject to the
<PAGE>
restrictions on transfer and forfeiture and resale obligations set
forth in the Restricted Stock Plan of Arrow Electronics, Inc. (the
"Company"), a copy of which is on file with the Secretary of the
Company."
ARTICLE 6
Voting and Dividend Rights
6.1 Voting Rights. Grantees holding Shares issued
hereunder shall have full voting rights on such Shares.
6.2 Dividend Rights. Grantees holding Shares issued
hereunder shall have the right to receive and retain dividends paid thereon,
subject to Section 4.2 hereof.
ARTICLE 7
Miscellaneous Provisions
7.1 No Implied Rights. No employee or other person shall
have any claim or right to be granted an Award under the Plan. Neither the
Plan nor any action taken hereunder shall be construed as giving any employee
any right to be retained in the employ of the Company or any Subsidiary.
7.2 Subsidiary. As used herein, the term "Subsidiary"
shall mean any corporation a majority of the outstanding voting stock of which
is owned, directly or indirectly, by the Company.
7.3 Securities Law Compliance. No Shares shall be issued
hereunder unless counsel for the Company shall be satisfied that such issuance
will be in compliance with applicable Federal and State securities laws.
7.4 Taxes. The employee granted an Award (or his
personal representative) shall pay to the Company any amount requested by it in
respect of any Federal, State or local income or other taxes required by law to
be withheld with respect to the Shares issued to the employee. If the amount
requested is not promptly paid, the Committee may determine that the Shares are
forfeited to the company pursuant to Section 5.2.
7.5 Expenses. The expenses of the Plan shall be borne by
the Company. However, if an Award is made to an employee of a Subsidiary of
the Company, such Subsidiary shall pay to the Company an amount equal to the
fair market value of the Shares, as determined by the Committee, on the date
such Shares are no longer subject to the restrictions imposed by Sections 5.1
and 5.2, minus the amount, if any,
<PAGE>
received by the Company in respect of the purchase of such Shares.
7.6 Ratification of Actions. By accepting any Award or
other benefit under the Plan, each employee and each person claiming under or
through him shall be conclusively deemed to have indicated his acceptance and
ratification of, and consent to, any action taken under the Plan by the
Company, the Board or the Committee.
7.7 Gender. The masculine pronoun means the feminine and
the singular means the plural wherever appropriate.
ARTICLE 8
Amendments or Discontinuance
The Plan may be amended at any time and from time to time by
the Board but no amendment which increases the aggregate number of Shares which
may be issued pursuant to the Plan shall be effective unless and until the same
is approved by the shareholders of the Company. No amendment of the Plan shall
adversely affect any right of any grantee with respect to any Award theretofore
granted without such grantees written consent.
ARTICLE 9
Termination
This Plan shall terminate upon the earlier of the following
dates or events to occur:
(a) upon the adoption of a resolution of the Board
terminating the Plan; or
(b) November 11, 1997.
No termination of the Plan shall alter or impair any of the
rights or obligations of any person, without his consent, under any Award
theretofore granted under the Plan.
<TABLE> Exhibit 11
<CAPTION>
ARROW ELECTRONICS, INC.
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
Year Ended December 31,
1994 1993 1992 1991 1990
(In thousands except per share data)
Primary
<S> <C> <C> <C> <C> <C>
Average shares of common
stock outstanding 45,999 44,532 38,329 26,879 24,439
Net effect of dilutive
stock options - based
on the treasury method 635 828 1,241 974 375
Total 46,634 45,360 39,570 27,853 24,814
Net income $ 111,889 $ 106,559 $ 79,461 $ 33,889 $ 32,962
Less preferred stock
dividends - (880) (3,903) (4,596) (4,899)
Total $ 111,889 $ 105,679 $ 75,558 $ 29,293 $ 28,063
Per share amount $ 2.40 $ 2.33 $ 1.91 $ 1.05 $ 1.13
Fully Diluted
Average shares of common
stock outstanding 45,999 44,532 38,329 26,879 24,439
Net effect of dilutive
stock options - based
on the treasury method 635 911 1,263 1,070 398
Assumed conversion of 9%
convertible subordi-
nated debentures - - - 851 862
Assumed conversion of
5-3/4% convertible sub-
ordinated debentures 3,773 3,774 381 - -
Assumed conversion of
preferred stock - 691 3,433 3,615 3,879
Total 50,407 49,908 43,406 32,415 29,578
Net income $ 111,889 $ 106,559 $ 79,461 $ 33,889 $ 32,962
Add interest on 9%
convertible subordi-
nated debentures,
net of income tax
effect - - - 1,649 2,700
Add interest on 5-3/4%
convertible subordi-
nated debentures,
net of income tax
effect 4,313 4,313 455 - -
Total $ 116,202 $ 110,872 $ 79,916 $ 35,538 $ 35,662
Per share amount $ 2.31 $ 2.22 $ 1.84 $ 1.10(A)$ 1.21(A)
(A) This calculation is submitted in accordance with Regulation S-K Item 601(b)(11) although
it is contrary to paragraph 40 of APB Opinion No. 15 because it produces an anti-dilutive
result.
</TABLE>
ARROW ELECTRONICS, INC.
SUBSIDIARY LISTING
1. Arrow Electronics, Inc. a New York corporation
2. Arrow Electronics International, Inc., a Virgin Islands corporation
3. Arrow Electronics Canada Ltd., a Canadian Corporation
4. Lex Electronics, Ltd., a Canadian Corporation
5. Arrow Electronics Credit Corporation, a Delaware Corporation
6. Schuylkill Metals of Plant City, Inc., a Delaware Corporation
7. Arrow Electronics International, Inc., a Delaware Corporation
8. Arrow Electronics (UK) Inc., a Delaware Corporation
9. Arrow/TEK Ltd., a Japanese Joint Venture (50% owned)
10. Capstone Electronics Corp., a Delaware Corporation
11. High Tech Ad, Inc., a New York Corporation
12. Gates/Arrow Distributing, Inc., a Delaware Corporation
13. Anthem Electronics, Inc., a Delaware Corporation, including subsidiaries:
A. Anthem Enterprises
B. Lionex Corp.
C. Anthem Technology Systems
14. Arrow-Field OY and subsidiaries, a Finnish Company
15. Arrow-TH:s Elektronik AB, and subsidiaries, a Swedish Company (owned 85%)
16. Exactec A/S, and subsidiaries, a Danish company (owned 85%)
17. Arrow Electronics Distribution Group - Europe B.V., a Dutch company, and
Subsidiaries which include:
A. Arrow Electronics (UK) Limited, a British Company, and subsidiaries:
1. RR Electronics Limited, a British Company
2. Axiom Electronics Ltd., a British Company
3. Jermyn Holdings Limited, a British Company & Subsidiaries
4. Techdis Limited, a British company, and subsidiary:
a. Microprocessor & Memory Distribution Ltd., a British
Company
B. EDI Electronics Distribution International (France) SA, a French
Company and subsidiaries:
1. Arrow Electronique S.A., a French Company, and subsidiaries:
a. Generim S.A., a French Company
b. Feutrier S.A., a French Company
c. CCI Electronique S.A., a French Company
d. Megachip S.A., a French Company (owned 75%) and
subsidiaries
C. Arrow Electronics GmbH, a German Company (which owns 70% interest
of Spoerle Electronic Handelgesellschaft mbH, a German company, and
subsidiaries)
D. Arrow ATD Netherlands B.V., a Dutch company (which owns 67% of ATD
Electronica S.A., a Spanish company
E. ARROW-Amitron Netherlands B.V., a Dutch company (which owns 55% of the
shares of Amitron-Arrow S.A.)
F. Silverstar Ltd. S.p.A. (86% owned) & subsidiaries
G. Arrow Australia Pty Ltd. (100% owned) and subsidiaries:
1. Veltek Australia Pty Ltd. (75% owned)
2. Zatek Australia Pty Ltd. (75% owned)
18. Components Agent Limited, a British Virgin Island company (owned 90%) and
Subsidiaries which include:
A. Components Agent Limited, a Hong Kong company
B. Components Agent China Limited, a Hong Kong company
C. Components Agent Korea Limited, a Hong Kong company
D. Components Assembly & Sales Pte Ltd, a Singapore company
E. Casl. (M) Sdn. Berhad, a Malaysian company, and subsidiaries
F. Salson Holdings Limited, a British Virgin Islands company, and
subsidiary:
1. Qinhuangdao Arrow Electronics Company Limited, a company
of the People s Republic of China
G. Components Korea Company Limited, a Korean company
19. Texny (Holdings) Limited, a British Virgin Islands company (owned 95%) and
Subsidiaries:
A. Texny (H.K.) Limited, a Hong Kong company, and subsidiary:
1. Glorytact Company Limited, a Hong Kong company
B. Intex-semi Limited, a Hong Kong company (inactive company)
C. Colourmedia Animation Limited, a Hong Kong company (inactive
company)
20. Strong Electronics Co., Ltd. and subsidiaries, a Taiwanese Joint Venture
(owned 45%)
21. Ally/Arrow, Inc. a Taiwanese company (75% owned)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE 1994 10-K AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
<MULTIPLIER> 1,000
<S> <C>
<CURRENCY> U.S. DOLLARS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-1-1994
<PERIOD-END> DEC-31-1994
<PERIOD-TYPE> YEAR
<EXCHANGE-RATE> 1
<CASH> 105,606
<SECURITIES> 0
<RECEIVABLES> 697,021
<ALLOWANCES> 31,132
<INVENTORY> 725,436
<CURRENT-ASSETS> 1,558,243
<PP&E> 150,672
<DEPRECIATION> 60,857
<TOTAL-ASSETS> 2,038,774
<CURRENT-LIABILITIES> 689,463
<BONDS> 349,398
0
0
<COMMON> 46,168
<OTHER-SE> 791,717
<TOTAL-LIABILITY-AND-EQUITY> 2,038,774
<SALES> 4,649,234
<TOTAL-REVENUES> 4,649,234
<CGS> 3,832,169
<TOTAL-COSTS> 4,393,260
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 20,289
<INTEREST-EXPENSE> 36,168
<INCOME-PRETAX> 219,806
<INCOME-TAX> 91,206
<INCOME-CONTINUING> 111,889
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 111,889
<EPS-PRIMARY> 2.40
<EPS-DILUTED> 2.31
</TABLE>
